Scottish tax rates: what you need to know

Scottish income tax rates are different from those in the rest of the UK, with seven bands instead of four. However, the way income tax is paid in Scotland is the same. You pay tax based on the bands your earnings fall into.

Read on for more information about Scottish tax rates for 2025 and the latest tax changes.

• How the Scottish tax system works
• Scottish tax bands and rates in 2025
• Latest income tax announcements in Scotland
• Impact of Scottish income tax changes
• Scottish tax rates FAQs

Scottish income tax rates – how the system works

If you live or work in Scotland, it’s likely you’ll pay Scottish income tax which is paid to the Scottish government. 

Even if you don’t live or work in Scotland, you may also be liable to pay Scottish income tax if you spend a lot of time in Scotland or split your time between a property in Scotland and one elsewhere in the UK.

Scottish income tax rates are set by the Scottish government, but the personal allowance is the same as in the rest of the UK. In Scotland, the basic rate of income tax is split into three separate bands:

• starter rate
• basic rate
• intermediate rate

The higher rate starts at a lower threshold in Scotland (£43,663, instead of £50,271 in the rest of the UK) and includes an extra band called the advanced rate (between £75,001 and £125,140). 

The top rate of tax in Scotland starts at the same income threshold as the additional rate in the UK, but is charged at a higher tax rate.

Generally, lower earners will pay less income tax in Scotland than if they were based in another part of the UK. At the same time, higher earners tend to pay more income tax in Scotland compared to England, Wales, and Northern Ireland.

Read more: Business tax – a guide for small businesses

Scottish tax rates and bands in 2025

Here’s an overview of the Scottish income tax bands and rates for the 2024-25 tax year:

See the rates for the 2025-26 tax year.

Taxpayers in Scotland pay income tax on their earnings in each bracket. For example, if you earn £35,000 a year, the income tax you’d need to pay would be broken down like this:

• 0% on the first £12,570 = £0
• 19% on the next £2,306 = £438.14
• 20% on the next £11,685 = £2,337
• 21% on the next £8,439 = £1,772.19
• Total income tax bill = £4,547.33

Scottish taxpayers pay the same tax on dividends and savings interest as the rest of the UK. 

Your personal allowance will decrease by £1 for every £2 you earn over £100,000. And if you earn over £125,140 in Scotland, you don’t get a personal allowance.

It’s important to note that the National Insurance system is the same in Scotland as in the rest of the UK.

The 2025 Scottish Budget – income tax announcements

A range of income tax changes for the 2025-26 tax year were announced as part of the Scottish Budget 2025-26 in December 2024:

• the upper threshold for the starter rate will increase from £14,876 to £15,397
• the lower threshold for the basic rate will increase from £14,877 to £15,398
• the upper threshold for the basic rate will increase from £26,561 to £27,491
• the lower threshold for the intermediate rate will increase from £26,562 to £27,492
• the higher, advanced, and top rates of income tax have been frozen until the end of the current parliament in 2026-27

Scottish tax bands 2025-26

Impact of changes to Scottish income tax on individual taxpayers

The changes for the 2025-26 year will see the scope of the starter band increased by 22 per cent.

As a result, the thresholds for paying both the basic and intermediate rates will increase by 3.5 per cent.

At the time the new rates were announced, they were well above the September 2024 inflation figure of 1.7 per cent. Inflation has since increased to 2.8 per cent.

The changes will see more of the lowest earners pay the starter rate at 19 per cent, while people will have to start earning more before they pay the basic (20 per cent) or intermediate (21 per cent) rates.

Find out more about UK tax changes for the self-employed.

Scottish income tax rates – key takeaways

If you live or work in Scotland, or spend a lot of time there, it’s likely you’ll need to pay Scottish income tax.

Scottish income tax rates are set by the Scottish government, but the personal allowance, tax on dividends and savings, and National Insurance follow the same system as the rest of the UK.

Taxpayers in Scotland are subject to more bands and different thresholds. Generally, compared to the rest of the UK, those who earn less pay less tax and those who earn more pay more tax. 

The Scottish government has announced several changes to income tax thresholds for the 2025-26 tax year that are designed to keep tax bills down for the lowest earners.

Make sure you seek the advice of a tax expert or professional accountant if you’re unsure about upcoming tax changes or anything to do with Scottish income tax.

Scottish tax rates – FAQs

What is the 20% tax threshold?

Taxpayers in Scotland pay 20 per cent income tax on earnings between £14,877 and £25,561. For the 2025-26 tax year, the threshold for the 20 per cent basic rate will increase from £15,398 to £27,491.

How much can I earn before I pay 40% tax in Scotland?

The higher rate of income tax in Scotland is set at 42 per cent. For the 2024-25 and 2025-26 tax years you can earn £43,662 in a year before paying 42 per cent tax.

How much tax will I pay on my pension in Scotland?

In most cases, you can take up to 25 per cent of your pension as a tax-free lump sum.

The remaining 75 per cent of your pension is taxed based on the Scottish income tax rates.

More tax guides for businesses

• Small business tax relief – a guide to reduce your tax bill
• Self-employed expenses in the UK – what can you claim?
• Capital gains tax – a guide for business owners
• How to do a Self Assessment tax return online