Income tax in Scotland

This information only applies in Scotland.

Income tax is tax paid on all forms of income. In Scotland, income tax is paid to the Scottish Government. This guide provides information on who is required to pay income tax, how much they have to pay, and how it is collected.

Ask a lawyer

Get advice about Income tax in Scotland

Speak to a lawyer today.

What do I have to pay income tax on?

Income tax is payable on all earnings. That doesn't just mean the money you make from your job – it can be almost any source of income that you have. You pay income tax on things such as:

  • money earned through your employment
  • profits you make through being self-employed – this might be something you do alongside your usual job, like renting out your home to tourists
  • some state benefits including the State Pension, Jobseekers Allowance (JSA) and Carer's Allowance
  • pensions – this includes the State Pension, private pensions and retirement annuities
  • money made from renting out a property or a room in a house – if you are a live-in landlord you won't pay tax on up to £7,500 of these earnings (the Rent a Room Scheme)
  • income from a trust
  • interest earned from savings – there a savings allowances that let you collect some of this interest tax-free

What types of income do I not have to pay tax on?

You don't have to pay income tax on:

  • the first £1,000 you earn through being self-employed
  • the first £1,000 you earn from renting out property – unless you are already benefiting from the Rent a Room Scheme
  • income from Individual Savings Accounts (ISAs), National Savings Certificates and other tax-exempt accounts
  • dividends from company shares below the dividend allowance – for the tax year 2017/18 this is £5,000, reduced to £2,000 for 2018/19
  • premium bond or National Lottery winnings

What are the rates of income tax?

There are different income tax rates paid on different levels of earning. These are called ‘tax bands'. The current tax bands are:

  • personal allowance (up to £11,850) – 0%
  • starter rate (£11,850 to £13,850) – 19%
  • basic rate (£13,851 to £24,000) – 20%
  • intermediate rate (£24,001 to £43,430) – 21%
  • higher rate (£43,431 to £150,000) – 41%
  • top rate (over £150,000) – 46%

How is income tax paid?

Most people pay tax through PAYE. This is a system used by employers to deduct tax that you owe and pay it to HM Revenue & Customs without you having to do anything. You will have a tax code that tells your employer how much they have to take out of your earnings each time they pay you.

If you are self-employed, or if you have other income you receive outside of your regular job, you will be responsible for declaring and paying your own income tax. This is done through a process called Self Assessment. Every year you will have to complete a tax return and send it to HMRC. This can be done online or in paper form but must be completed before the relevant deadlines. For the tax year 2017/18, these deadlines are:

  • registration for Self Assessment – 5 October 2018
  • paper tax return – midnight 31 October 2018
  • online tax returns – midnight 31 January 2019
  • tax paid – midnight 31 January 2019
Ask a lawyer

Get advice about Income tax in Scotland

Speak to a lawyer today.