Scottish Income Tax changes take effect

Scottish Income Tax rates and bands for 2025-26 took effect from the start of the tax year on 6 April 2025, following the Scottish Budget published on 4 December 2024¹. The rates themselves are unchanged; the Starter rate band increased by 22.6% and the Basic rate band by 6.6%¹. The Scottish Government said the effect is to raise the thresholds at which taxpayers pay the Basic and Intermediate rates by 3.5%, against September 2024 CPI inflation of 1.7%¹.

The Higher, Advanced and Top rate thresholds are maintained at £43,662, £75,000 and £125,140 respectively¹. The National Audit Office describes the 2025-26 change as increasing the thresholds at which Scottish taxpayers pay basic and intermediate rates by 3.5% while freezing all other thresholds².

Source: Scottish Budget 2025-26¹. The Starter rate figure assumes the standard UK Personal Allowance; those earning more than £100,000 see their Personal Allowance reduced by £1 for every £2 earned over £100,000¹. The same table is reproduced by Which?³ and by Hargreaves Lansdown⁴. HMRC's Tax Calculation Summary notes for 6 April 2025 to 5 April 2026 set out the Scottish rates as 19%, 20%, 21%, 42%, 45% and 48%⁵.

The Scottish Fiscal Commission forecast that Income Tax will raise £20,477 million in 2025-26, an increase of 3% compared with its most recent forecast in December 2023¹. Freezing the Higher, Advanced and Top rate thresholds in nominal terms is forecast to raise £76 million in 2025-26, while above-inflation increases to the Basic and Intermediate thresholds are forecast to lower revenue by £24 million; the package as a whole is forecast to raise £52 million¹. The Scottish Government said devolved tax is forecast to contribute £24.6 billion to the Scottish Budget in 2025-26, and that its Income Tax policy choices since devolution will raise up to an additional £1.7 billion in 2025-26 compared with matching UK Government policy¹.

The Scottish Government also stated that, to the end of the Parliament, it will not introduce any new bands or increase the rates of Scottish Income Tax, will maintain its commitment that over half of Scottish taxpayers pay less Income Tax than in the rest of the UK, and will uprate the Starter and Basic rate bands by at least inflation¹. Based on current Scottish Fiscal Commission forecasts, it estimated that taxpayers earning around £30,300 will pay slightly less Income Tax than they would elsewhere in the UK in 2025-26¹.

Why it matters for households

The bands apply to the non-savings, non-dividend income of Scottish taxpayers; savings and dividend income, reliefs and exemptions, and the Personal Allowance remain reserved to the UK Parliament¹. Because the Starter and Basic bands are wider, more of a lower earner's income falls into the 19% and 20% bands rather than the 21% Intermediate rate, while the point at which the 42% Higher rate starts is unchanged at £43,663¹. The NAO notes that in 2024-25 Scottish taxpayers in the lower bands paid a lower marginal rate than elsewhere in the UK, and those earning more than £26,561 paid a higher marginal rate². HMRC calculated there were 2.9 million Scottish taxpayers in 2023-24, up from 2.8 million in 2022-23².

What happens next

The Scottish Parliament must pass a Scottish Rate Resolution each year to set the rates and bands; a draft motion and explanatory note for 2025-26 were published on the Scottish Government's website¹. HMRC expects to publish the outturn for 2024-25 in its 2025-26 Annual Report and Accounts². HMRC and the Scottish Government will decide in February 2026 whether to commission an additional annual compliance exercise in 2026 or revert to biennial timing with the next exercise in 2027². Hargreaves Lansdown reports that from 6 April 2026 the Starter, Basic and Intermediate rate thresholds will change again, citing the Scottish Budget 2026-27 published on 14 January 2026⁴.