Derek Mackay announced the Scottish draft budget for 2018/19 on Thursday 14th December 2017. The biggest change was in relation to income tax for Scottish taxpayers. 

Scottish tax rates and bands

The powers to set income tax rates and bands was given to the Scottish government last year and, as expected, these do differ from the rest of the UK. These will apply to anyone who is living in Scotland. 

There will be 5 income tax rates in Scotland in 2018/19, which is 2 more than elsewhere in the UK. The main differences from the UK tax rates were the introduction of a starter rate and an intermediate rate. The tax rates and bands are as follows:

Band name Band Rate (%)
Starter £11,850 - £13,850 19
Basic £13,851 - £24,000 20
Intermediate £24,001 - £44,273 21
Higher £44,274 - £150,000 41
Additional Above £150,000 46

The above assumes that the individual is in receipt of the standard UK personal allowance of £11,850. Per the rest of the UK, the personal allowance is gradually reduced by £1 for every £2 earned over £100,000. 

As you can see from the above, the higher rate threshold is lower than it is for the rest of the UK (which has a threshold of £46,350). The tax rates are also higher for anyone earning over £24,000. 

Other announcements

Some of the other announcements that may be of interest are as follows:


Relief from LBTT (the Scottish equivalent of stamp duty) is planned for first time buyers on the first £175,000 of a property purchase. A consultation will follow on this before 2018/19.


There will be an increase in NHS spending of over £400m.


£243m planned to be made available to help increase the amount of free childcare to 1,140 hours by 2020.


Tuition fees to remain free for eligible Scottish and EU domiciled undergraduate students.


Repayment threshold for student loans to increase to £22,000 with a maximum repayment period of 30 years. 

Discover More

This is just a short overview of the changes proposed by Derek Mackay, however you can visit the Scottish Government website here to discover more.