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 to Scotland and have spent over half of 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 there but stay there on a regular basis. For example, you might work and stay offshore or in hotels.
For more information on who must pay Scottish income tax, read the Government’s guidance.
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
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 do I not have to pay tax on?
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
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 is the Personal Allowance?
Most people receive a Personal Allowance. This is an amount of income that you can receive and not pay tax on. Once your income is above your Personal Allowance you will need to pay tax on it at specified rates. For the 2023/24 tax year the Personal Allowance is £12,570. The Personal Allowance applies UK-wide.
If you earn more than £100,000 (this threshold is set for the 2023/34 tax year), your Personal Allowance will 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 starter rate income tax on all of your income between £2,570 (your reduced Personal Allowance) and £14,733 (the threshold at which you must start paying the next rate, ie the Scottish basic rate). You won’t have a personal allowance if you earn more than £125,140.
What are the rates of income tax?
Different income tax rates are paid on different levels of earning. These are called tax bands.
The tax bands and their rates for Scotland for the 2023/24 tax year are:
for taxable income up to the Personal Allowance (ie £12,570) - 0%
the starter rate - for taxable income between £12,571 and £14,732 – 19%
the Scottish basic rate - for taxable income between £14,733 and £25,688 – 20%
the intermediate rate - for taxable income between - £25,689 and £43,662 – 21%
the higher rate - for taxable income between £43,663 and £125,140 – 42%
the top rate - for taxable income over £125,140 – 47%
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, read the Government’s guidance on Personal Allowances and higher rates of income.
For more information about Scottish income tax, read the Scottish Government’s guidance.
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 (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 they have to take out of their earnings each time they pay them.
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 in Scotland.