Income tax in Scotland

What is income tax in Scotland?

Scottish income tax is the tax you pay on your earnings if you live in Scotland. It applies to your non-savings and non-dividend income, such as your wages, self-employed profits, and pensions. HMRC still collects the tax, but the money is then paid to the Scottish Government to fund local public services.

If you have income from savings interest or dividends, these are still taxed using the UK-wide rates and bands, even if you're a Scottish taxpayer.

Who pays income tax in Scotland?

You'll pay Scottish income tax if you're a UK resident and your main home is in Scotland. HMRC determines your taxpayer status based on where you spend most of your time during the tax year.

You may be considered a Scottish taxpayer if:

• you live in Scotland for the whole tax year

• you have homes in both Scotland and another part of the UK, but your main home is in Scotland

• you don't have a permanent home, but stay in Scotland for more of the year than anywhere else in the UK

If you move to or from Scotland during the year, you'll be a Scottish taxpayer if you live there for at least as long as you live in any other UK country.

For more information on who must pay Scottish income tax, see the government’s guidance on income tax in Scotland. 

What do I have to pay income tax on?

Income tax is payable on almost all earnings. Earnings that you must pay income tax on include, but are not limited to:

• money earned through your employment

• 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

• 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

• income from a trust - this differs depending on the type of trust

• some of the interest earned from savings (eg savings held in a bank or building society account) - there are savings allowances that let you collect some of this interest tax-free

What types of income are exempt from tax?

There are some kinds of income on which you do not usually have to pay income tax. Lots of these are UK-wide rather than specific to Scotland. You generally don't have to pay income tax on:

• the first £1,000 you earn through being self-employed (ie the trading allowance)

• the first £1,000 you earn from renting out property (ie the property allowance) – unless you are already benefiting from the rent a room scheme, under which you won't pay tax on up to £7,500 of rental income if you are a live-in landlord earning rental income from a lodger

• income up to a certain level 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 2025/26, this is £500

• premium bond or National Lottery winnings

For more information on the types of income that you must pay tax on, see the government's guidance on income tax.

​​What are the Scottish income tax bands?

For the 2025/26 tax year, the bands for taxable income are:

• starter rate - 19% on income between £12,571 and £15,397

• basic rate - 20% on income between £15,398 and £27,491

• intermediate rate - 21% on income between £27,492 and £43,662

• higher rate - 42% on income between £43,663 and £75,000

• advanced rate - 45% on income between £75,001 and £125,140

• top rate - 48% on income over £125,140

What is the personal allowance in Scotland?

Just like in England and Wales, most people in Scotland receive a personal allowance. This is the amount you can earn before you start paying any income tax. For the 2025/26 tax year, this is £12,570.

If you earn over £100,000, your personal allowance reduces by £1 for every £2 your income goes over that limit. This means you'll have no personal allowance if your income is £125,140 or more.

Note that your rates and calculations will be different if your personal allowance is reduced. You may also have to fill in a Self Assessment tax return. For more information, see the government’s guidance on personal allowances and higher rates of income. 

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 HMRC, who then pay it on to the Scottish Government, without employees having to do anything. Employees will have a tax code that tells their employer how much to deduct from their earnings each time they are paid.

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 Assessment, read Personal tax and National Insurance contributions.

For more information about Scottish income tax, see the Scottish government’s guidance on income tax. 

To estimate your income tax for the year, use the government's income tax calculator.