Scottish Income Tax

Scottish income tax applies to the non-savings, non-dividend income of anyone whose main residence is in Scotland for most of the tax year. Residence is the test, not where you work or where your employer is based, so a Scottish taxpayer commuting to an English employer still pays Scottish rates. HMRC identifies them by putting an S in front of the tax code, which makes S1257L the Scottish counterpart of the standard code.

Scotland sets six bands rather than the three that apply in the rest of the UK. On income above the Personal Allowance in 2026/27, the starter rate of 19 per cent runs to £16,537, the basic rate of 20 per cent to £29,526, the intermediate rate of 21 per cent to £43,662, the higher rate of 42 per cent to £75,000, the advanced rate of 45 per cent to £125,140, and the top rate of 48 per cent applies above that. Those ceilings are published as total income on the assumption of a full Personal Allowance.

What Scotland does not set matters just as much. The Personal Allowance is reserved and identical UK-wide, as is the taper that removes it above £100,000. National Insurance is reserved too, and its Upper Earnings Limit stays at the UK figure, which sits above the Scottish higher-rate threshold. The practical effect is a slice of income on which a Scottish taxpayer pays 42 per cent income tax and 8 per cent National Insurance at the same time, which no taxpayer elsewhere in the UK encounters.

Savings and dividend income are taxed at UK rates for everyone, Scottish taxpayers included, so one person can face two rate tables in a single year. If your code carries an S and should not, or lacks one and should have it, the correction is with HMRC rather than your employer: payroll must apply whatever code it is given, and cannot choose a regime.