Scotland Could Pay More Tax in 2017

Published / Last Updated on 21/12/2016

Scotland Could Pay More Tax in 2017.

The Scottish Draft Budget was published last week and in accordance with Scotland now able to set its own tax thresholds, excluding the nationwide Personal Allowance, set centrally by the UK Government, they have proposed their first breakaway in income tax collection.

For the whole of the UK, the Personal Allowance for 2017/18 is set to increase to £11,500, an increase Nationally of £500 for England, Northern Ireland, Scotland and Wales.

In addition, the basic rate tax band for the rest of the UK is being increased by £1,500 to £33,500 (currently £32,000 in all UK) above which higher rate 40% tax is payable (income £45,000+), whereas Scotland has chosen to increase the higher rate tax threshold by inflation only.  This means that because the UK overall has been given a bigger than inflation increase on the personal allowance and basic rate band, it has actually resulted in the basic rate band in Scotland potentially reducing from £32,000 to £31,930.

Tax Bands for 2017/18

Residents in

England, Northern Ireland, Wales


Personal Allowance (0% Tax)



Basic Rate Band 20% tax



Total/Threshold when 40% Higher Rate Tax Starts



Additional Rate 50% tax

£150,000 +

£150,000 +


This means that if your gross income is £45,000 in England, Northern Ireland and Wales you will still be a basic rate tax payer at 20%.

If you live in Scotland and earn £45,000 gross, you will have crossed over into the higher rate tax threshold and the excess over £43,450 i.e. £1550 will be taxed at 40%, compared to your colleagues south of the border or across the water who will still be paying 20% up to £45,000.  This is an additional tax bill, in this example, of £310.

Will the Scottish tax increase happen?

We think it unlikely as the Scottish National Party does not hold a majority in the Scottish Parliament, but is this a sign of things to come?

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