Income tax

Rates

Income tax applies to the amount of income after deduction of personal allowances.

Income is taxed in a specific order with savings and dividend income taxed last.

Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.

The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.

The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.

2018/19:

TypeBand of taxable income (£)Rate (%)Rate if dividends (%)
Starting rate for savings0 – 5,0000N/a
Basic rate0 – 34,500207.5
Higher rate34,501 – 150,0004032.5
Additional rateOver 150,0004538.1

For Scottish residents the following bands apply for non-savings and non-dividend income:

TypeBand of taxable income (£)Rate (%)
Starter rate0 – 2,00019
Basic rate2,001 – 12,15020
Intermediate rate12,151 – 31,58021
Higher rate31,581 – 150,00041
Additional rateOver 150,00046

There are special rates for savings and dividend income.
Savings Allowance:

Band of taxpayerAmount (£)Rate (%)
Basic rate1,0000
Higher rate5000
Additional rate0N/a

Dividend Allowance:

Band of taxpayerAmount (£)Rate (%)
All2,0000

2017/18:

TypeBand of taxable income (£)Rate (%)Rate if dividends (%)
Starting rate for savings0 – 5,0000N/a
Basic rate0 – 33,500207.5
Higher rate33,501 – 150,0004032.5
Additional rateOver 150,0004538.1

For Scottish residents the following bands apply for non-savings and non-dividend income:

TypeBand of taxable income (£)Rate (%)
Basic rate0 – 31,50020
Higher rate31,501 – 150,00040
Additional rateOver 150,00045

There are special rates for savings and dividend income.

Savings Allowance:

Band of taxpayerAmount (£)Rate (%)
Basic rate1,0000
Higher rate5000
Additional rate0N/a

Dividend Allowance:

Band of taxpayerAmount (£)Rate (%)
All5,0000

Allowances

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual’s adjusted net income is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple’s allowance but this is reduced if adjusted net income is above the married couple’s allowance income limit (see table below).

Marriage allowance – 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple’s allowance.

Personal Allowance

Allowances2018/19 (£)2017/18 (£)
Personal allowance11,85011,500
Marriage allowance1,1901,150

Blind person’s allowance

£2,390 (2017/18: £2,320)

Married couple’s allowance

Either partner born before 6th April 1935.

Reduction in tax bill2018/19 (£)2017/18 (£)
Maximum869.50844.50
Minimum336.00326.00
Age allowance income limit 128,90028,000

Note…

  1. Reduce married couples allowance by £1 for every £2 of adjusted net income over £28,900.

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