Derek Mackay delivered his Scottish Budget speech which sets out the Scottish Government spending and taxation plans which will take effect from 6 April 2018.
The Scottish Government has limited powers however has taken steps to amend income tax rates and adjust Land and Buildings Transaction Tax for first time buyers.
Scottish Income Tax 2018/19
New bands and rates of Income Tax for those living in Scotland will be as follows:
| First £11,850 of income | £nil |
| Income between £11,850 and £13,850 | 19% |
| Income between £13,851 and £24,000 | 20% |
| Income between £24,000 and £44,273 | 21% |
| Income over £44,273 | 41% |
| Income over £150,000 | 46% |
Please note that these rates do not apply to income from savings and dividends.
The tax rates for other parts of the United Kingdom will be as follows:
| First £11,850 of income | £nil |
| Income between £11,850 and £46,350 | 20% |
| Income over £46,350 | 40% |
| Income over £150,000 | 45% |
Scotland will now have five tax rates! This is compared to just three in the remainder of the UK which adds additional complexity into the tax system.
Those living in Scotland earning less than £26,000 per year will pay less tax under the new tax rates, but those with income above £26,000 will suffer a higher tax charge.
Land and Buildings Transaction Tax (LBTT)
A new LBTT relief was also introduced as part of the Scottish budget. It is to be introduced for first time buyers of residential properties valued up to £175,000. The normal nil rate band is £145,000, so this additional £30,000 increase will provide a tax saving of £600 for first time buyers.
