On 20 February 2025, the Scottish Parliament agreed to Motion S6M-16531 which sets the following Income Tax rates and thresholds to come into force for Scottish Taxpayers for tax year 2025/26 (compared to the rates and thresholds for 2024/25):
|
Band
|
Rate
|
2024/25
|
2025/26
|
|
|
%
|
£
|
£
|
|
Scottish Starter
|
19
|
1 – 2,306
|
1 – 2,827
|
|
Scottish Basic
|
20
|
2,307 – 13,991
|
2,828 – 14,921
|
|
Scottish Intermediate
|
21
|
13,992 – 31,092
|
14,922 – 31,092
|
|
Scottish Higher
|
42
|
31,093 – 62,430
|
31,093 – 62,430
|
|
Scottish Advanced
|
45
|
62,431 – 125,140
|
62,431 – 125,140
|
|
Scottish Top
|
48
|
Over 125,140
|
Over 125,140
|
This approval is known as setting the Scottish Rate Resolution. The vote in the Scottish Parliament (necessary for the purposes of section 11A of the Income Tax Act 2007) was approved with Members of the Scottish Parliament (MSP) voting:
- 86 for the Motion;
- 27 against the Motion; and
- 16 abstentions
The Scottish National Party (SNP) run a minority Government in Scotland with 62 MSPs, therefore, managed to obtain the support all of other parties, bar one. This is important, as under the Scottish Budget rules in Holyrood, Parliament cannot hold the final stage of the Budget debate (stage three) until the Rate Resolution has been passed. This is due to take place next week, at which time the Budget (Scotland) (No 4) Bill will be passed into legislation.
There are several key points to take from the 2025 Scottish Rate Resolution:
1. The rates and bands are unchanged in name and percentage and the Cabinet Secretary for Finance and Local Government, Shona Robison MSP, confirmed there is no intention to introduce any new bands or increase the rates of Scottish Income Tax for the duration of this Parliamentary session (with elections due no later than 07 May 2026);
2. The Starter Rate band increases by 22.6%;
3. The Basic Rate band increases by 6.6% (with the impact of reducing the Intermediate Rate band where Income Tax is payable at 21%; and
4. The Higher, Advanced and Top thresholds are frozen at 2024/25 levels
For Bookkeepers
Software developers can now implement these changes in payroll products now the rates and thresholds have been confirmed for tax year 2025/26. These apply to Scottish Taxpayers. It’s all eyes now on the Welsh Rate Resolution setting the Welsh Rates of Income Tax for 2025/26 and applying to Welsh Taxpayers. This must be agreed before the Welsh Budget can be passed into legislation with the final Budget debate due 04 March 2025.
ICB will update it’s Rates and Allowances document for 2025/26 and publish this when all information is known.
