How did the Scottish budget affect income tax?
The 2023 Scottish budget announced reasonably substantial changes to the income tax thresholds in Scotland.
The table below outlines the new tax bands that have been proposed for the tax year starting on 6th April 2024.
| Name of Band | Earnings in band | Tax rate |
| Starter | £12,571* – £14,876 | 19% |
| Basic | £14,877 – £26,561 | 20% |
| Intermediate | £26,562 – £43,662 | 21% |
| Higher | £43,663 – £75,000 | 42% |
| Advanced | £75,001 – £125,140** | 45% |
| Top | Above £125,140 | 48% |
*Assumes individuals are in receipt of the standard personal allowance. The personal allowance is the amount of income you can receive tax free each tax year.
**Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.
The most notable change is the implementation of a new tax band for earnings of between £75,001 to £125,140.
These increases to the tax rates make the tax relief available for making pension contributions even more attractive.
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It is crucial to obtain expert professional advice on pensions as the rules can be extremely complicated.
Information correct as at 21/12/23.
All information is based on Farrell Financial Planning’s understanding of the Scottish Government’s proposals.
A pension is a long-term investment. The fund value can fluctuate and go down. All information is based on Farrell Financial Planning’s understanding of UK law & HMRC practice in the UK. Tax and legislation are subject to change.