Scottish and Welsh income tax: rates, bands and who pays them

Income tax works differently in Scotland from the rest of the UK, and differently again in Wales. If you live in Scotland, you pay Scottish Income Tax on your wages, your pension and most other taxable income, with rates and bands set by the Scottish Parliament rather than at Westminster¹. For the 2026 to 2027 tax year those rates run from 19% up to 48%, across six bands, on top of a UK-wide Personal Allowance of £12,570¹.

The tax is still collected by HMRC, through your Pay As You Earn code and self assessment, exactly as elsewhere in the UK². What has been devolved is the power to decide the rates and the band thresholds for earned income. Savings interest and dividends stay on UK rates wherever in the country you live, and allowances and reliefs, including the Personal Allowance and pension tax relief, remain reserved to the UK Government¹.

Wales has a more limited arrangement. The Welsh Government can vary the rates of income tax through the Welsh rates of income tax, but in practice the rates have stayed aligned with the rest of the UK, and HMRC collects the tax on the Welsh Government's behalf³.

Six bands set by the Scottish Parliament

Scottish Income Tax is a tax on money you earn, with the rates and bands set by the Scottish Parliament². The Scotland Act 2012 gave the Scottish Parliament its first income tax power, a single Scottish rate of income tax that took effect from 6 April 2016. In 2016 to 2017 that rate was set at 10p, which meant Scottish tax policy was identical to that of the rest of the UK⁶. The Scotland Act 2016 then extended the powers, so that from 6 April 2017 the Scottish Parliament could set the band thresholds, excluding the Personal Allowance, as well as the rates⁴.

The result is a partially devolved tax⁷. The Scottish Government sets the rates and bands, HMRC collects the tax and pays the receipts to the Scottish Government via HM Treasury⁸, and the UK Government keeps control of the rest of the system. Matters that remain reserved include the taxation of income from savings and dividends, the setting of allowances including the Personal Allowance, the definition of taxable income, and income tax reliefs such as relief on pension contributions⁶.

The devolved powers cover what is officially called non-savings, non-dividend income, or NSND: earnings, pensions, self-employed profits, rental income and taxable benefits such as the State Pension and Carer's Allowance⁹. The Scottish Parliament must pass a Scottish Rate Resolution setting the rates and bands before the start of each tax year, and no in-year changes are possible¹⁰. Rates and bands for each financial year since 2016 to 2017 are published by the Scottish Government⁵.

Scottish Income Tax rates and bands for 2026 to 2027: from 19% to 48%

The rates for 2026 to 2027 were set out at the Scottish Budget on 13 January 2026 by the Cabinet Secretary for Finance⁴. If you receive the standard Personal Allowance, the bands and rates are:

The bands assume individuals receive the standard Personal Allowance⁴. The six-band structure has evolved over recent years. In 2024 to 2025 a new band, the advanced rate at 45%, was introduced between the higher rate, then amended to 42%, and the top rate of 48%¹¹. Before that, the 2024 to 2025 thresholds stood at a higher rate threshold of £43,663, an advanced rate threshold of £75,000 and a top rate threshold of £125,140¹¹.

For 2026 to 2027 the Scottish Government increased the thresholds for paying both the Basic and Intermediate rates by 7.4%, with the Starter rate band limit increasing by 40.3% and the Basic rate band limit by 13.6%¹². The Higher, Advanced and Top rate thresholds are maintained at their current levels, and the Scottish Government states they will be held there until 2028 to 2029¹³. The Scottish Government's technical factsheet states that no taxpayer will pay more Scottish Income Tax in 2026 to 2027 than they did in 2025 to 2026 on their current income¹².

For comparison, the 2025 to 2026 bands were: Starter rate of 19% on £12,571 to £15,397, Basic rate of 20% on £15,398 to £27,491, Intermediate rate of 21% on £27,492 to £43,662, Higher rate of 42% on £43,663 to £75,000, Advanced rate of 45% on £75,001 to £125,140, and Top rate of 48% above £125,140¹⁴.

Who counts as a Scottish taxpayer

The definition of a Scottish taxpayer is based on where an individual resides in the course of a tax year, and it applies for a whole tax year: you are either a Scottish taxpayer for the entire year or you are not¹¹. The definition itself is set out in section 25 of the Scotland Act 2012⁶.

You pay Scottish Income Tax if you live in Scotland¹. More precisely, you pay it if you live in a home in Scotland and your main home is there, or if you have a home in Scotland and one somewhere else in the UK, for example for work, and Scotland is where you live for the longer period⁹. You may also pay it if you do not have a home but stay in Scotland regularly, for example if you stay offshore or in hotels instead⁹. And you may pay it if you move to or from Scotland during the year, which is covered in the next section.

The location of your employer is not relevant. Someone who works in Scotland but has their home elsewhere in the UK is not a Scottish taxpayer on the basis of their workplace alone¹¹. The test is residence, not where the job is, and not where the payroll is run.

The numbers HMRC holds show how this works in practice. In the 2022 to 2023 tax year there were 2.77 million taxpayers with Scottish postcodes, compared with 2.75 million individuals with a Scottish taxpayer indicator, a small gap reflecting people whose recorded status differs from where their address suggests they live¹⁵.

The legal machinery sits in the Income Tax Act 2007. Section 11A charges income tax at Scottish rates on the non-savings income of a Scottish taxpayer¹⁶. Section 11D contains a reading rule: for a Scottish taxpayer, references to income that would otherwise be charged at a particular rate are read as income that would, if the individual were not a Scottish taxpayer but were UK resident, be charged at that rate¹⁷. Section 16 covers matters that include determining which part of a Scottish taxpayer's income consists of savings income¹⁸.

One point that matters for statistics and for some tax rules: HMRC classifies Scottish taxpayers with income in the starter and intermediate bands as "basic" rate Income Tax payers, and from 2024 to 2025 those in the advanced band as "additional" rate payers¹⁹. So a document that refers to you as a basic rate taxpayer may still mean you pay the 19% or 21% Scottish rates.

Moving to or from Scotland: tell HMRC or pay the wrong rate

HMRC must be told of a new address by anyone who moves to or from Scotland, and tax may be paid at the wrong rate if it is not²⁰. A change of address within Scotland must also be reported to HMRC, so that status and tax code stay correct⁹.

The rule for a mid-year move is that you pay Scottish Income Tax if you move to Scotland and live there for a longer period than anywhere else in the UK during the tax year, which runs from 6 April to 5 April the following year²⁰. Because taxpayer status applies for a whole tax year, the new rate you pay is backdated to the start of the tax year, 6 April, in which you moved²⁰. The tax taken from your wages or pension is then adjusted automatically so you pay the right amount across the whole year²⁰. In practice this means your employer's payroll corrects itself over the remaining months rather than you being asked for a single lump sum.

A move house also has knock-on effects beyond income tax. You need to tell your local council if you move into or out of a property, and you must also tell your local council if another adult moves into or out of your home, since council tax liability follows residence²¹. If you are moving or retiring abroad, you need to tell HMRC that too, to make sure you pay the right amount of tax²².

Savings and dividends are taxed at UK rates, not Scottish ones

Scottish Income Tax does not apply to savings or to dividend income⁹. You pay the same tax as the rest of the UK on dividends and savings interest¹. The UK saving and dividend rates and thresholds apply to savings and dividend income for Scottish residents²³.

This is the single most misunderstood part of the devolved system. The Scottish rates and thresholds apply only to non-savings, non-dividend income, and only income tax due on that NSND income is devolved to Scotland²⁴. So a Scottish resident with a salary of £30,000 and £1,000 of bank interest pays the Scottish rates on the salary, but the interest is taxed under the UK rules on savings income, using the UK rate bands.

The legislation recognises the split explicitly. Section 16 of the Income Tax Act 2007 covers determining which part of a Scottish taxpayer's income consists of savings income¹⁸, and the Scottish rates are charged on the non-savings income only¹⁶. When HMRC administers the tax, including through self assessment, the UK saving and dividend rates and thresholds apply to savings and dividend income²³.

Do Scottish taxpayers pay more or less than the rest of the UK?

The honest answer is that it depends on your income, and the crossover point has moved as the bands have changed.

For 2026 to 2027, the Scottish Government's technical factsheet states that those earning less than around £33,500, which is expected to be around 55% of Scottish taxpayers, will pay slightly less than they would elsewhere in the UK, and that once deductions such as pension contributions are taken into account, the proportion of Scottish taxpayers set to pay less than in the rest of the UK is expected to be around 57%¹². Taxpayers earning the median income of around £31,136 will be around £24 better off than if they lived elsewhere in the UK, and around £32 better off than they were in 2025 to 2026¹².

The same factsheet states that no taxpayer will pay more Scottish Income Tax in 2026 to 2027 than they did in 2025 to 2026 on their current income, and that over 32% of Scottish adults, around 1.5 million out of 4.7 million adults, are not affected by the 2026 to 2027 policy changes because their incomes are below the UK-wide Personal Allowance of £12,570. A further 7%, around 330,000 Starter rate taxpayers with income below the Basic rate threshold, are also unaffected¹².

Looking back at earlier years shows how the position has shifted. For 2025 to 2026, the Scottish Government estimated that those earning less than around £30,300, around 51% of Scottish taxpayers, would continue to pay slightly less than if they lived elsewhere in the UK, and that over 34% of Scottish adults, over 1.6 million out of 4.65 million, were not affected by that year's changes²⁵. A Scottish Parliament research briefing using 2021 to 2022 policies calculated that Scottish taxpayers earning more than £27,393 would pay more tax in Scotland than they would in the rest of the UK, while around 54% of Scottish taxpayers, 1.4 million individuals, paid less⁶. The threshold at which the position flips has risen as the lower Scottish bands have been widened.

The structural difference is easiest to see at the top. In 2026 to 2027 the Scottish higher rate of 42% begins on income over £43,663, and the advanced rate of 45% on income over £75,000, bands that do not exist in the rest of the UK⁴. The Scottish Government's draft Scottish Rate Resolution presents the higher rate threshold as applying to income over £31,092, measured after deducting the Personal Allowance rather than as gross income¹².

Personal Allowance: £12,570 across the UK

The Personal Allowance is the same across the whole UK: £12,570 for 2026 to 2027¹. It is not a devolved matter. The UK Personal Allowance of £12,570 was confirmed by the UK Government in the 2025 Autumn Statement⁴.

Because the Personal Allowance is deducted before the Scottish bands apply, the first £12,570 of your income is tax-free wherever you live. Someone in Scotland earning £17,000, for example, pays tax on £4,430 of their income²⁶. The starter rate of 19% then applies to the next slice, from £12,571 to £16,537⁴.

The high-income taper is also UK-wide. Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000²⁷. You do not get a Personal Allowance at all if you earn over £125,140¹, which is also where the Scottish top rate of 48% begins⁴.

Marriage Allowance in Scotland: a lower income limit for your partner

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner, which reduces their tax by up to £252 in the tax year²⁸. To benefit as a couple, you as the lower earner must normally have an income below your Personal Allowance, which is usually £12,570²⁸.

The partner receiving the transfer must pay Income Tax at the basic rate. This is where Scotland differs: in England, Wales and Northern Ireland that usually means their income is between £12,571 and £50,270 before receiving the allowance, but if you are in Scotland your partner must pay the starter, basic or intermediate rate, which usually means their income is between £12,571 and £43,662²⁸. The lower ceiling reflects the fact that the Scottish intermediate band ends at £43,662, below the UK higher rate threshold.

Other rules are the same across the UK. You cannot claim if you are living together but not married or in a civil partnership²⁸. Receiving a pension does not affect the application, and living abroad does not affect it as long as you get a Personal Allowance²⁸. Your Personal Allowance transfers automatically every year until you cancel Marriage Allowance²⁸. You can backdate a claim to 6 April 2022, the 2022 to 2023 tax year, and if your partner has died since 5 April 2022 you can still claim by phoning the Income Tax helpline²⁸.

Marriage Allowance should not be confused with Married Couple's Allowance, a separate relief for older couples where the income limit is £39,200²⁹.

Welsh income tax: devolved, with 10p of each rate going to Wales

Wales has income tax powers of its own, but of a narrower kind than Scotland's. Partially devolved income tax, the Welsh rates of income tax, is collected by HMRC on behalf of the Welsh Government³. In Wales there are five taxes in operation with some degree of devolved responsibility, collected by different bodies³.

The Welsh arrangement works by splitting each income tax rate. The UK rates are reduced by 10p in the pound for Welsh taxpayers, and the Welsh Government sets the Welsh rates that fill the gap, so it can vary rates up or down but cannot create new bands or move thresholds in the way the Scottish Parliament can. The Welsh rates of income tax ready reckoner for 2026 to 2027 shows the effect of changes to the Welsh rates on devolved income tax revenues³⁰. To date the Welsh rates have been set at levels that keep the overall rates the same as in England and Northern Ireland, so a Welsh taxpayer's payslip looks the same as an English one.

The same boundary applies in Wales as in Scotland: the devolved rates cover non-savings, non-dividend income, while savings and dividends stay on UK rates. HMRC identifies Welsh taxpayers by residence, in the same way and on the same whole-tax-year basis as it identifies Scottish taxpayers.

Checking your tax code and correcting the rate you pay

If you pay Scottish Income Tax, you will have an "S" at the beginning of your tax code⁵. That letter is the quickest check on whether HMRC is treating you as a Scottish taxpayer. If you have moved to or from Scotland and your code does not carry the S prefix, or carries it when it should not, you may be paying tax at the wrong rate²⁰.

To query the rate of Scottish Income Tax you pay, you can call HMRC on 0300 200 3300, with lines open Monday to Friday from 8:00 to 18:00². NHS Scotland pensioners with a tax query are directed to the same number³¹. When you call, have your National Insurance number and details of your income to hand, and be ready to confirm your address history if a move is involved.

If you pay Income Tax above the Scottish Basic Rate of 20%, you can claim additional tax relief on things like pension contributions and gift aid donations, because relief at source is given at the basic rate and the difference has to be claimed back²⁶. HMRC's published figures for things like allowances and reliefs are different in Scotland from the rest of the UK, so always check that guidance you are reading applies to Scottish rates³².

Where a mistake has been made, HMRC corrects the position through your tax code, adjusting the tax taken from your wages or pension so you pay the right amount across the year²⁰. If you think you have been on the wrong code for more than one year, ask HMRC to review the earlier years as well, since the backdating rules for a change of status reach to the start of the tax year in which you moved²⁰.

For wider help with tax and benefits in Scotland, including where tax sits alongside council tax in Scotland and the other devolved taxes, see the guide to money in Scotland, Wales and Northern Ireland, and for the UK-wide picture of income tax, allowances and reliefs, see personal tax in the UK. The detailed rules on residence are covered in the guide to Scottish taxpayer status.