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Personal tax in Scotland

This information only applies in Scotland.

For those who are self-employed or who employ others in the course of their business, having an understanding of personal taxation is hugely important.

Income tax is the tax paid on many different types of income. You pay income tax on things such as:

  • money earned through your job
  • profits you make through being self-employed
  • some state benefits
  • pensions
  • money made from renting out a property or a room in a house
  • income from a trust
  • interest earned from savings (if this is over a certain amount)

If you live in Scotland, you pay Scottish Income Tax. This money goes to the Scottish Government.

You pay different rates of income tax depending on how much you earn. The different rates paid on different levels of earning are called ‘tax bands'. The current tax bands are:

  • personal allowance (up to £12,570) – 0%

  • starter rate (£12,571 to £14,667) – 19%

  • basic rate (£14,668 to £25,296) – 20%

  • intermediate rate (£25,297 to £43,662) – 21%

  • higher rate (£43,663 to £150,000) – 41%

  • top rate (over £150,000) – 46%

Everyone who lives permanently in Scotland pays Scottish Income Tax.

You might 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 here on a regular basis. For example, you might work and stay offshore or in hotels.

If you have an employer or receive a pension, you will have a tax code that tells your employer or pension provider the rate at which they should deduct tax from your income. Other people will pay tax by filling out a Self Assessment tax return.

PAYE is the system used by HM Revenue & Customs to collect income tax and national insurance from employers. To make this possible, employers are required to operate PAYE as part of their payroll and make deductions for tax, national insurance, student loan repayments and pension contributions. These deductions need to be reported to HMRC on or before each payday. Payments are then made to HMRC, usually once a month.

Income tax is collected from those who are self-employed or who have sources of income other than from an employer or pension through Self Assessment. You will be responsible for paying the income tax and national insurance contributions that would otherwise be paid through your employer or pension provider. This can be done online or in paper form but must be completed before the relevant deadlines. For the tax year 2021/22, these deadlines are:

  • registration for Self Assessment – 5 October 2021

  • paper tax return – midnight 31 October 2021

  • online tax returns – midnight 31 January 2022

  • tax paid – midnight 31 January 2022

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