Scottish Parliament gains full control over residents’ income tax.

From April 2017, the UK government will devolve further legislative powers to set income tax rates and thresholds applying to employment, pensions and property income (‘non-savings, non-dividends’ income) of residents in Scotland to the Scottish Parliament.

Currently the Scottish government has the power to set income tax rates at the level of UK rates plus/minus 10%, known as the Scottish rate of income tax (SRIT). From April 2017 this restriction will be removed and the Scottish Parliament will gain full control over the income tax rates of residents in Scotland.

Following the devolution, the UK-wide main income tax rates applied to non-savings, non-dividends income will no longer apply in Scotland. However, Scottish MPs will continue to play their existing role in approving these rates in the UK Parliament.

Outside of the newly devolved Scottish income tax rates, there will be three income tax rates in the UK:

  • main rate – will continue to apply to non-savings, non-dividend income, such as employment, pensions and property income of UK residents (not subject to Scottish tax regime or default rate (see below)
  • savings rate (set as ‘basic’, ‘higher’ and ‘additional’ rates) – will apply to savings income generated in the UK
  • default rate – will apply in very limited circumstances to taxpayers falling outside of the above categories, made up primarily of non-savings, non-dividend income of trustees and non-residents.


Article from ACCA In Practice