Changes to Scottish income tax rates today - how it affects you

Changes to tax rates which will affect higher earners in Scotland are coming into effect today with the start of the new financial year.

Here’s what you need to know.

What is changing?

From today (6th April) the higher and top rates of income tax in Scotland are increasing by 1p, rising to 42p and 47p in every £1 respectively

Who is paying more?

The changes affect anyone who’s taxable annual income is more than £43,663 a year.

If you earn less than that the rate of tax you pay will not change, although the amount you pay will change the more or less you earn.

When was this agreed?

The changes were announced by the former Deputy First Minister, John Swinney, in December and passed by MSPs earlier this year.

Ministers say it will raise an extra £129m for the Scottish Government in 2023-24.

Why is this only in Scotland?

The Scotland Act 2016 gave the Scottish Parliament full control over income tax rates and bands, except the personal allowance

In 2017/18 the Scottish Government introduced the first divergence from an all-UK income tax system by freezing the income limit for higher rate tax when it was increased elsewhere,

In 2018/19 a separate system of rates and bands was introduced, splitting the basic 20% rate into three levels with a lower starting rate of 19% and an intermediate 21% rate.

The two top tax bands were also increased by 1p to 41% and 47%

How is this different to the rest of the UK?

As well as the rate for the higher tax bands now being 2p more in Scotland, a difference has developed in recent years on when Scots begin to be charged more.

Since 2017 - when the threshold was the same across the UK - in 2023 Scots enter the higher tax bracket then their earnings exceed £43,663, whereas in the rest of the UK the figure is currently £50,271.

What does the Scottish Government say?

Deputy First Minister Shona Robison said: "The decisions we have made on income tax are fair and progressive by ensuring that those who can, contribute more.

"They strengthen our social contract with the people of Scotland who will continue to enjoy many benefits not available in the rest of the UK such as free prescriptions.

"The additional revenue will help us invest in our vital public services including the NHS, above and beyond the funding received from the UK Government.

"At the same time, the majority of taxpayers in Scotland will still be paying less income tax than if they lived in the rest of the UK.

How can I check I’m paying the right amount?

We’re being encouraged to look to see that the tax code is correct on the first payslip we get and if you are unsure to check with HMRC.

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