Anyone living in Scotland needs to make sure they are on a ‘S’ tax code to ensure they are paying the correct tax
Taxpayers north of the border need to check their tax code urgently to ensure it is prefixed with an ‘S’ if they live in Scotland before April pay checks start landing or as soon as they get their payslip.
Scottish rates are significantly higher for anyone earning over £43,663 with a 42% higher rate of tax, while those with incomes over £75,000 to £125,140 face a 45% rate.
Top earners are caught by a 48% rate on earnings over £125,140, the same threshold as the rest of the UK, but a 3% higher tax rate than colleagues south of the border.
Scotland has five tax bands and rates, and has also been hit by the UK wide freeze in thresholds at £12,570, which would have seen tax liability hiked again, save for the two cuts in non-devolved National Insurance this year.
Anyone earning over £26,561 will pay a higher tax rate than the rest of the UK at 21%, compared to 20% for everyone else. The cut in National Insurance rates to 8% also applies in Scotland.
Deputy First Minister Shona Robison said: ‘I encourage everyone to check their first payslip in April to make sure their address is correct and that their tax code starts with an ‘S’. This will ensure that people are paying the right amount of tax on their income.’
The latest rates serve to illustrate the divergence between Scottish and rUK tax rates stressed the Chartered Institute of Taxation (CIOT).
Sean Cockburn, chair of CIOT’s Scottish technical committee, said: ‘Although the Scottish government’s tax choices will result in higher earning Scots paying more income tax from this month, these have been somewhat offset by the UK-wide National Insurance changes.
‘It means that while Scots with earnings above £75,000 will pay more in income tax, those with earnings under £112,900 will actually end up paying less in tax and national insurance overall compared with the year just past.
‘It illustrates what can happen when Scottish and UK tax choices interact with one another.’
Scottish income tax bands and rates 2024-25
| 2024-25 | Band | Rate |
| Starter | £12,571 - £14,876 | 19% |
| Basic | £14,877 - £26,561 | 20% |
| Intermediate | £26,562 - £43,662 | 21% |
| Higher | £43,663 - £75,000 | 42% |
| Advanced | £75,001 - £125,140 | 45% |
| Top | Above £125,140 | 48% |
Due to the small number of high earners in Scotland, the rates of tax do not affect as many people pro rata as such a policy would if it were adopted in the rest of the UK, particularly England.
Robison added: ‘Only 5% of Scottish taxpayers will pay a higher tax rate this year compared to last year and the majority of taxpayers are still paying less than they would elsewhere in the UK.’