Five rates of Scottish income tax?
Budget. On 14 December 2017 the Scottish Finance Secretary delivered his Budget for 2018/19. The most significant announcement was a proposed move to a five-tiered income tax rate system.
| Income level | Tax rate |
| £11,580 - £13,850 | 19% |
| £13,851 - £24,000 | 20% |
| £24,001 - £44,273 | 21% |
| £44,274 - £150,000 | 41% |
| £150,000+ | 46% |
Impact. The Institute of Chartered Accountants of Scotland (ICAS) has assessed the likely impact of this proposed change (see Follow up ), and believes that 70% of Scottish taxpayers would see a slight benefit from the changes, with 30% paying more than they do currently. The position compared with a taxpayer in the rest of the UK (rUK) is also considered. This is important as the main UK higher rate thresholds are to increase by more than the Scottish equivalent.
Advising. If you have clients who live in both Scotland and rUK, remember that one of the criteria for being a Scottish taxpayer is merely that they spend more time in Scotland than in rUK. If this is evenly split, it might be worth changing living habits slightly to tip the balance in one direction or another, depending on what would be most beneficial.
Pro advice. Because any benefits or additional costs will be relatively small for most taxpayers, it will not be worth undergoing a large upheaval just to acquire or shed Scottish taxpayer status.
ICAS impact report
The Scottish Budget for 2018/19 proposes a new five-tiered income tax system for Scottish taxpayers. Your clients should investigate whether they could acquire or shed Scottish taxpayer status if they would benefit from doing so.
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