Published 27th March 2017

If you live in Scotland on 5th April 2017 you will start to pay higher rate tax sooner than in the rest of the UK, but the new tax bands for Scotland do not apply to National Insurance Contributions or to Capital Gains Tax or to income from savings and investments, so Scottish residents will have to have two calculations if their income exceeds £43,000. For more information click here.

The point at which a taxpayer goes from paying 20% to 40% in Scotland will be where the income exceeds £43,000, whereas in the rest of the UK it will be £45,000. But this only applies to earned income. The UK bands still apply to National Insurance, income from savings and investments and to Capital Gains Tax where the rate of tax changes when income exceeds £45,000. So all Scottish residents will need one calculation for earned income and another for all other income and gains.

To add insult to injury it means that an employee with £45,000 earned income living in Scotland will pay 40% income tax on the excess over £43,000 plus 12% National Insurance (which applies in the whole of the UK) up to £45,000. A total of 52% on the income between £43,000 and £45,000.