An Update to Scottish Income Tax Rates for 2024-25

In an update published on Tuesday, 19th December, the SNP’s Finance Secretary, Shona Robison, released a new plan for Scottish income tax rates which could have an effect on employee payroll if not updated and managed correctly. The Scottish Government also announced a newly introduced 45 per cent income tax band for people earning between £75,000 and £125,140 per year.

In  addition to this new income tax level, the top rate of tax paid by those earning above the £125,140 rate will also rise from 47 per cent to 48 per cent from April 2024. A 42 per cent rate will remain in place for those earning between £43,633 and £75,000 — and the £43,633 threshold will remain in place for the 2024-2025 tax year.

In the rest of the UK, a higher rate of 40 per cent is currently in place on income between £50,271 and £125,140, with all earnings above that taxed at a higher 45 per cent rate.

Scottish income tax bands for the 2024/25 tax year:

  • Starter (19%): £12,571 – £14,876
  • Basic (20%): £14,877 – £26,561
  • Intermediate (21%): £26,562 – £43,662
  • Higher (42%): £43,663 – £75,000
  • Advanced (45%): £75,001 – £125,140
  • Top (48%): Above £125,140

This latest update comes following the UK Government’s update to National Insurance Contribution rates outlined in the Autumn Statement, more information on which can be
found here.

Staying up to date with constant changes to social, public and tax policy and manual updates of internal payroll processes can be costly, resource-heavy and time-consuming. The implications of getting changes wrong are vast.

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