Who pays income tax in Scotland?
Everyone who lives permanently in Scotland pays Scottish Income Tax.
You may also have to pay it if you have moved and spent over half the tax year living in Scotland.
If you have a house in Scotland and a house somewhere else, you may be liable for paying tax in Scotland. This will depend on which is considered your main home. Your main home will be the one that you usually live at and spend the majority of your time.
You may have to pay income tax in Scotland if you don't have a home here but stay there on a regular basis. For example, you might work and stay offshore or in hotels.
What do I have to pay income tax on?
Income tax is payable on almost all earnings. That doesn't just mean income from your job – it includes almost any source of income that you have. You pay income tax on things such as:
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money earned through your employment
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profits you make through being self-employed – this might be something you do alongside your usual job, for example renting out your home to tourists or running an Etsy shop
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some state benefits, including the State Pension, Jobseekers Allowance (JSA) and Carer's Allowance
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pensions – this includes the State Pension, private pensions and retirement annuities
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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)
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income from a trust – this differs depending on the type of trust
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some of the interest earned from savings – there are savings allowances that let you collect some of this interest tax-free
What types of income do I not have to pay tax on?
There are some kinds of income on which you do not usually have to pay tax. Lots of these are UK-wide, rather than specific to Scotland. You generally don't have to pay income tax on:
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the first £1,000 you earn through being self-employed (the ‘trading allowance’)
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the first £1,000 you earn from renting out property – unless you are already benefiting from the Rent a Room Scheme (the ‘property allowance’)
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income from Individual Savings Accounts (ISAs), National Savings Certificates and other tax-exempt accounts
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dividends from company shares below the dividend allowance – for the tax year 2022/2023 this is £2,000
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premium bond or National Lottery winnings
For more information on the types of income that you must pay tax on, read the Government’s guidance.
What are the rates of income tax?
Different income tax rates are paid on different levels of earning. These are called ‘tax bands'. The current tax bands in Scotland are:
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personal allowance (UK-wide) (up to £12,570) – 0%
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starter rate (£12,571 to £14,732) – 19%
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Scottish basic rate (£14,733 to £25,688) – 20%
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intermediate rate (£25,689 to £43,662) – 21%
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higher rate (£43,663 to £150,000) – 41%
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top rate (over £150,000) – 46%
If you earn more than £100,000, your personal allowance will also be reduced by £1 for every £2 you earn over £100,000. For example, if you earn £120,000, your personal allowance will be reduced by £10,000, and you will pay 19% income tax on all of your income over £2,570 (your reduced personal allowance). This means that you won’t have a personal allowance if you earn more than £125,140.
For more information about Scottish income tax, read the Scottish Government’s factsheet.
To estimate your income tax for the year, use the Government's income tax calculator.
How is income tax paid?
Most people pay tax through Pay Are You Earn (PAYE). This is a system that employers use as part of their payroll systems to deduct tax that you owe and to pay it to HM Revenue & Customs (who pay it on to the Scottish Government), 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 it must be completed before the relevant deadlines. For more information on Self Assessments, read Personal tax in Scotland.
