Scottish income tax 2024-25 – What might you be paying?

Garry Tetley, Tax Partner at Deloitte, said: “There were no increases in Scottish income tax rates or new tax bands this year.

“Inflationary adjustments in the lower rate bands will result in small tax savings of up to £14.51 for taxpayers at all levels, but wage inflation will push many taxpayers into higher rate bands.

“While the starter rate band will increase by 22.6% and the basic rate band will increase by 6.6%, the higher rate threshold remains at £43,662 for a fifth year running.

“This is still significantly lower than the UK higher rate threshold of £50,270 which has been frozen until 2027/28.

“Employees earning between these thresholds also pay 8% national insurance, which results in a combined marginal tax rate of 50% in this income bracket for those living in Scotland.

“The advanced rate (45%) threshold and the top rate (48%) threshold are also frozen at £75,000 and £125,140, respectively.

“Lower earners in Scotland continue to pay less tax than those in the rest of the UK (the maximum saving is £28.27); the breakeven point for 2025/26 is £30,318.

“The Scottish government’s devolved powers for personal taxes are limited to setting the bands and rates of income tax for non-savings non-dividend income, such as salaries, profits and pensions.

“Income tax on savings and dividend income, capital gains tax and national insurance are all set by the Westminster government.

“Most of these rates and thresholds are the same in 2024/25 and 2025/26, with the exception of employer’s national insurance and certain capital gains.

“The commitment (for the rest of the Parliament) not introduce any new bands or increase the rates of Scottish Income Tax and uprate the starter and basic rate bands by at least inflation provides stability.

“However, the continued divergence from the rest of the UK means that top talent earning higher salaries will continue to face higher tax bills in Scotland.”