If you are a resident of Scotland then you may have to know all about Scottish income tax. In this article, we are looking at income tax for the 2021-2022 years to help you better understand how it works.

What is the Scottish Income Tax?

This is a tax that has been applied to residents of Scotland since 6th April 2017. It is a tax that only affects Scottish taxpayers. It applies to any non-savings and non-dividend income you may have. If you are a Scottish taxpayer you will continue to pay income tax at the right rates that apply to the rest of the UK if you have savings and dividend income.

Each year in the autumn, the Scottish government puts forwards its bands and rates for the coming year. These then have to be agreed upon by all and put into law by parliament.

Rates and bands for 2021-2022

The latest rates and bands for these years came into effect on 6th April 2021. The government confirmed as part of their budget that personal allowance will increase to £12,570 in this time period. Below are the rates and bands for this tax year.

Your Income BandScottish rate of income tax payable
£12,5701 – £14,667Starter Rate19%
£14,668 – £25,296Basic Rate20%
£25,297 – £43,662Intermediate Rate21%
£43,663 – £150,000Higher Rate41%
£150,000+Top Rate46%

Who has to pay Scottish Income Tax?

The most obvious answer is that if you live in Scotland, you will pay the Scottish income tax rates. There are a few different cases though that make this a bit of a murky area. Examples of these are:

  • You own a home in Scotland but also have another one elsewhere in the UK: if this is the case you will be a Scottish taxpayer if your home in Scotland is considered to be your ‘main home’.
  • You don’t have a main home address: if you spend more days in Scotland than you would anywhere else, you’ll have to pay the Scottish income tax rates.
  • You decide to move out of or to Scotland during the tax year: wherever you spend the most time in that year will determine the type of tax you will pay. A person who spends most of their year in Scotland and then ends the year in the UK will still jave to pay Scottish rates.

Things that won’t make you a Scottish taxpayer are:

  • Working and travelling to and from Scotland.
  • Being born in Scotland but then living elsewhere.
  • Considering yourself to have Scottish nationality and heritage.