Scottish Income Tax Rates

Scottish income tax rates for 2025/26 sit across six bands following the rate and band changes set by the Scottish Parliament under the Scotland Act 2016. The starter rate of 19% applies to the first slice of taxable income, the basic rate of 20% to a small middle band, the intermediate rate of 21%, the higher rate of 42% above £43,662, the advanced rate of 45% above £75,000, and the top rate of 48% above £125,140. The structure applies to non-savings, non-dividend income only; savings and dividend income continue to be taxed under the UK-wide rate framework administered by HMRC.

Scotland operates six income tax bands under Scotland Act 2016 devolution

Scotland operates six income tax bands for non-savings, non-dividend income for 2025/26 under the partial devolution arrangements legislated by the Scotland Act 2016, materially diverging from the four-band structure used in the rest of the UK. The bands are starter rate (19%), basic rate (20%), intermediate rate (21%), higher rate (42%), advanced rate (45%), and top rate (48%). The Scottish Parliament sets the rates and thresholds each year by Scottish Rate Resolution, with HMRC implementing the collection through the PAYE system using S-prefix tax codes for Scottish-resident taxpayers.

The devolution covers rates and bands but not the personal allowance, which remains a reserved matter set by the UK Parliament. The personal allowance for 2025/26 is £12,570 across the UK, including Scotland. Above the allowance, Scottish-resident taxpayers face the Scottish band structure.

The Scottish higher rate of 42% begins at £43,662 of taxable income

The Scottish higher rate of 42% applies to taxable income between £43,662 and £75,000 for 2025/26, with the threshold materially lower than the £50,270 used in the rest of the UK. The gap means a Scottish resident on a gross income of £50,000 faces 42% Scottish higher rate tax on the slice above £43,662, while an equivalent earner in England, Wales or Northern Ireland remains in the 20% basic rate band. The differential adds materially to the income tax liability of higher-earning Scottish residents.

HMRC publishes statistics on Scottish Income Tax receipts and taxpayer counts. The Scottish Fiscal Commission produces independent forecasts of receipts, which feed into the Scottish Government Budget process under the fiscal framework agreed between HM Treasury and the Scottish Government.

The Scottish advanced rate of 45% kicks in at £75,000

The Scottish advanced rate of 45% applies to taxable income between £75,000 and £125,140 for 2025/26, a band that exists only in the Scottish income tax structure and is set above the UK additional rate threshold for comparison purposes. The advanced rate was introduced in the 2024/25 Scottish Budget and continues at 45% for 2025/26 under the current Scottish Rate Resolution. The £75,000 threshold sits £25,000 below the UK additional rate threshold of £100,000 (before taper) and is around £50,000 below the £125,140 point at which the UK 45% rate begins.

The advanced rate has been politically contentious because it overlaps with the personal allowance taper that applies UK-wide. A Scottish resident earning £110,000 of adjusted net income faces the 45% advanced rate on the slice above £75,000, the 60% effective marginal rate from the personal allowance taper between £100,000 and £125,140, and the resulting combined rate is materially higher than for an equivalent earner in the rest of the UK.

The Scottish top rate of 48% applies above £125,140

The Scottish top rate of 48% applies to non-savings, non-dividend income above £125,140 for 2025/26, three percentage points above the UK additional rate of 45%. The £125,140 threshold aligns with the UK additional rate threshold and the point at which the personal allowance has fully tapered to zero. The 48% rate was raised from the previous 47% in the 2024/25 Scottish Budget and continues at 48% for 2025/26. Scottish top-rate taxpayers face the highest marginal income tax rate in the UK, with the differential to the rest of the UK widest at this band.

The Scottish Fiscal Commission has modelled behavioural effects of the divergence, with concerns raised in evidence to the Scottish Parliament Finance and Public Administration Committee about migration responses and income shifting between Scottish and rest-of-UK residency. HMRC operates residency rules for tax purposes that determine which rate framework applies to a given taxpayer.

HMRC operates Scottish PAYE through S-prefix tax codes

HMRC implements Scottish income tax collection through the PAYE system using S-prefix tax codes (e.g. S1257L for the standard Scottish code), which signal to the employer's payroll system that Scottish rates and bands should be applied. The S prefix is applied based on HMRC's record of the taxpayer's residency address. Taxpayers who move between Scotland and the rest of the UK during a tax year are assessed on the basis of their main residence for the majority of the year, with HMRC adjusting tax codes when notified of a change of address.

Errors in the residency assessment are reconciled through self-assessment or PAYE adjustments. HMRC has published guidance on the operational rules for determining Scottish taxpayer status, including the main residence test and the day-counting backstop. The fiscal framework provides for receipts collected through Scottish PAYE codes to be transferred to the Scottish Government, net of HMRC operating costs.

Savings and dividend income remain on the UK-wide rate structure

Savings interest and dividend income continue to be taxed at UK-wide rates for Scottish residents, since the Scotland Act 2016 devolves only non-savings, non-dividend income to the Scottish Parliament. A Scottish resident earning savings interest above the personal savings allowance pays UK basic, higher, or additional rate income tax on that interest depending on total income, not the Scottish rates. The same applies to dividends, taxed at the UK dividend rates (8.75%, 33.75%, 39.35%). This split adds complexity to the calculation for Scottish taxpayers with mixed income sources.

The split is reflected in the self-assessment return through separate boxes for non-savings, non-dividend income (taxed under Scottish rates) and savings and dividend income (taxed under UK rates). HMRC's online calculator applies the relevant rates automatically once the residency is identified.

The Scottish Fiscal Commission forecasts receipts and divergence effects

The Scottish Fiscal Commission produces independent forecasts of Scottish Income Tax receipts under section 7 of the Scottish Fiscal Commission Act 2016, with the forecasts directly feeding into the Scottish Government Budget process. The forecasts identify the divergence revenue from the higher Scottish rates and thresholds, alongside the behavioural responses (migration, income shifting, labour supply) that partially offset the revenue gain. The Commission's forecasts are produced alongside OBR forecasts under the agreed fiscal framework.

Revenue Scotland operates the devolved taxes (Land and Buildings Transaction Tax, Scottish Landfill Tax) but does not collect Scottish Income Tax, which is administered by HMRC. The split reflects the Scotland Act 2016 partial devolution model: rates and bands are set by the Scottish Parliament, but collection remains with HMRC under the existing UK income tax administrative infrastructure.

What are the Scottish income tax rates 2025/26?

Six bands: starter rate 19%, basic rate 20%, intermediate rate 21%, higher rate 42%, advanced rate 45%, top rate 48%. The thresholds are set by the Scottish Parliament under the Scotland Act 2016 partial devolution framework.

When does Scottish higher rate tax begin?

The Scottish higher rate of 42% applies above £43,662 of taxable income for 2025/26, materially lower than the £50,270 used in the rest of the UK. The lower threshold means Scottish residents on middle incomes face higher rate tax earlier in the income distribution.

What is the Scottish advanced rate?

The Scottish advanced rate is 45% on taxable income between £75,000 and £125,140 for 2025/26. It is a band that exists only in the Scottish structure and was introduced in the 2024/25 Scottish Budget.

What is the Scottish top rate?

The Scottish top rate is 48% on taxable income above £125,140 for 2025/26, three percentage points above the UK additional rate of 45%. The rate was raised from 47% to 48% in the 2024/25 Scottish Budget.

Do Scottish rates apply to dividends and savings?

No. Scottish income tax rates apply only to non-savings, non-dividend income. Dividends and savings interest continue to be taxed under the UK-wide rate structure (8.75%/33.75%/39.35% for dividends; 20%/40%/45% for savings above the personal savings allowance) for Scottish residents.

How does HMRC identify Scottish taxpayers?

HMRC applies the Scottish tax framework using an S-prefix tax code, based on the taxpayer's residency address. Taxpayers who move between Scotland and the rest of the UK during a tax year are assessed on the basis of their main residence for the majority of the year, with HMRC adjusting codes when notified of a change.

How we verified this

This article draws on the following primary UK sources:

• Scottish Government: Income Tax rates 2025/26
• HMRC: Scottish Income Tax statistics and PAYE operational guidance
• Scottish Fiscal Commission: forecasts of Scottish Income Tax receipts
• Scotland Act 2016 (legislation.gov.uk) for the partial devolution framework
• Scottish Fiscal Commission Act 2016 (legislation.gov.uk)
• Revenue Scotland: scope of devolved tax administration
• HMRC Income Tax rates and allowances for the UK-wide framework

No secondary aggregators, no press releases from commercial providers, and no statistics without a named government or regulatory source were used.