- Income tax applies to the amount of income after deduction of personal allowances.
- Income is taxed in a specific order with savings and dividend income taxed last.
- Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
- The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.
- The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
Income tax rates 2018/19
|Band of taxable income||Rate||Rate if dividends|
|0 – 5,000||Starting rate for savings||0||N/A|
|0 – 34,500||Basic rate||20||7.5|
|34,501 – 150,000||Higher rate||40||32.5|
|Over 150,000||Additional rate||45||38.1|
|Special rates for savings and dividend income falling into above bands of taxable income|
|Basic rate taxpayers||1,000||0|
|Higher rate taxpayers||500||0|
|Additional rate taxpayers||Nil||N/A|
|for all taxpayers||2,000||0|