For the 2020/21 tax year, running from 6 April 2020 to 5 April 2021, Scottish income tax bands ran across five rates: a 19% starter rate, a 20% basic rate, a 21% intermediate rate, a 41% higher rate, and a 46% top rate. Those rates applied to non-savings, non-dividend income after the standard UK Personal Allowance of £12,500.1National Audit Office. Administration of Scottish Income Tax 2020-21
The full band structure for the year was:1National Audit Office. Administration of Scottish Income Tax 2020-21
- Starter rate, 19%: £12,501 to £14,585
- Basic rate, 20%: £14,586 to £25,158
- Intermediate rate, 21%: £25,159 to £43,430
- Higher rate, 41%: £43,431 to £150,000
- Top rate, 46%: over £150,000
Each rate applied only to the slice of income within its band, not to your whole salary. The thresholds assumed you received the full £12,500 Personal Allowance. If your adjusted net income went above £100,000, the allowance shrank by £1 for every £2 over that threshold and disappeared entirely at £125,000, so more of your income fell into the taxable bands.2Scottish Government. Income Tax Policy Proposal Scottish Budget 2021-22
How the Scottish Bands Compared with the Rest of the UK
England, Wales, and Northern Ireland used a three-band system in 2020/21: a 20% basic rate up to £50,000, a 40% higher rate up to £150,000, and a 45% additional rate above that.3House of Commons Library. Direct Taxes: Rates and Allowances 2020/21
At lower incomes the two systems produced almost identical bills. A Scottish earner on £20,000 paid about £21 less than someone in England, thanks to the 19% starter rate on the first slice of taxable income. At £30,000, Scotland’s 21% intermediate rate had roughly cancelled that saving out, leaving the two bills within about £28 of each other.
The real divergence appeared between £43,431 and £50,000. In Scotland that income was already being taxed at 41%. In England it still sat in the 20% basic rate band. Someone earning exactly £50,000 paid roughly £1,540 more in Scottish income tax than an identical earner south of the border. That figure is the one to hold on to when comparing the two systems for 2020/21.
Above £50,000 the gap narrowed. England’s 40% higher rate ran one percentage point below Scotland’s 41%, and at the very top Scotland’s 46% rate sat one point above England’s 45% additional rate.
Which Income the Scottish Rates Applied To
The Scottish bands covered wages, self-employment profits, and pension income. The Scottish Parliament’s power extended only to this non-savings, non-dividend income.4Scottish Fiscal Commission. Scottish Income Tax
Savings interest and dividends followed UK-wide rates and allowances regardless of where you lived. If you had significant investment income in 2020/21, only your employment and pension earnings went through the Scottish bands; the rest was taxed on the same terms as anyone else in the UK.5GOV.UK. Income Tax in Scotland
Who Counted as a Scottish Taxpayer
Whether HMRC applied the Scottish rates depended on where you lived, not where you worked. If you had a single UK home and it was in Scotland, you were a Scottish taxpayer for the whole year. If you had homes in more than one part of the UK, the main residence for the greater part of the tax year decided your status.6GOV.UK. Tests for Scottish Taxpayer Status: Overview
Where no clear main residence existed, HMRC used a day-counting test. There was no fixed 183-day threshold; you needed to have spent more days in Scotland than in any other single part of the UK. The status then applied to the entire tax year. You could not split the year between Scottish and non-Scottish status, even if you moved. If HMRC assigned you the wrong status, you could appeal.6GOV.UK. Tests for Scottish Taxpayer Status: Overview
National Insurance Was the Same Across the UK
National Insurance stayed a reserved matter, set by Westminster. Employees in 2020/21 paid 12% on earnings between £9,500 and £50,000 a year, plus 2% on anything above £50,000. Self-employed people paid Class 2 and Class 4 contributions at UK-wide rates. The deduction on a Glasgow payslip matched one in Bristol. Any difference in take-home pay between the two came from the income tax bands alone.
Filing and Paying for 2020/21
Scottish taxpayers filed through the same HMRC Self Assessment system as everyone else. For the 2020/21 return, the paper filing deadline was 31 October 2021 and the online deadline was 31 January 2022. Any tax owed had to be paid by 31 January 2022.
Missing the filing deadline triggered an automatic £100 penalty even if no tax was owed, with further penalties escalating at three, six, and twelve months late.7GOV.UK. Self Assessment Tax Returns: Penalties HMRC also charged interest on unpaid tax, at 2.60% for most of the year.8GOV.UK. HMRC Interest Rates for Late and Early Payments