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The Scottish Parliament announces tax threshold and rates changes for personal tax from April 2018

Following the announcement by the Scottish Parliament yesterday (14 December 2017), the rates and thresholds for paying personal tax for Scottish residents will change in April 2018. The basic personal allowance is set by the UK Parliament so remains the same either side of the Scottish border.

In 2016, tax codes changed for those living in Scotland – anyone who lived in (but did not necessarily work in) Scotland had an S attached as a prefix to the ‘normal’ tax code. The tax bands themselves remained unchanged.

In April 2017 the threshold at which the higher rate tax of 40% falls due was amended.

Tax rates for Scotland

Tax rates for England/Wales/Northern Ireland

Tax bands for 2017/18

Percentage rate charged

Tax bands for 2017/18

Percentage rate charged

  £0 - £11,500

0%

  £0 - £11,500

0%

  £11,501 - £43,000

20%

  £11,501 - £32,000

20%

  £43,001 - £150,000

40%

  £32,001 - £150,000

40%

  Above £150,000

45%

  Above  £150,000

45%

 

For Scotland, from April 2018, the basic tax band has been split into three separate bands. Changes will also be made to the higher and additional tax bands.

Tax rates for Scotland

Tax rates for England/Wales/Northern Ireland

Tax bands for 2018/19

Percentage rate charged

Tax bands for 2018/19

Percentage rate charged

  £0 - £11,850

0%

  £0 - £11,850

0%

  £11,851 - £13,850

19% (Starter rate)

  £11,851 - £34,500

20% (Basic rate)

  £13,851 - £24,000

20% (Basic rate)

  £24,001 - £44,273

21% (Intermediate rate)

  £44,274 - £150,000

41% (Higher rate)

  £34,501 - £150,000

40% (Higher rate)

  Above £150,000

46% (Top rate)

  Above £150,000

45% (Additional rate)

 

Note: from April 2019 the National Assembly for Wales will also be given powers to amend its tax rates. The UK government will reduce each of the 3 rates of income tax – basic, higher and additional rate – paid by Welsh taxpayers by 10p. The National Assembly for Wales will then decide the 3 Welsh rates of income tax, which will be added to the reduced UK rates.

As payroll is now automated and has to be reported digitally to HMRC via the process of RTI, provided that the tax code is correct, the software you use will be automatically updated to allow for the changes.

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