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Scottish Budget 2018

Scottish Budget 2018

On Wednesday 12 December, Finance Secretary Derek Mackay (Scottish National Party) delivered the draft Scottish Budget.  Although it could be argued that this was somewhat overshadowed by the goings on in Westminster.

Obviously, with the possibility of a no deal Brexit on the horizon, the minister made sure his announcement was caveated by him reserving the right to revisit the Budget if necessary.  He also pointed out that a no deal Brexit could affect the Scottish government’s spending plans

Income Tax

No changes to the rates of Income Tax were announced and unlike the rest of the UK, he did not increase the higher rate tax threshold.  This means the gap between top rate payers in Scotland has widened in comparison to the rest of the UK.

The new tax bands are as follows:

Scottish income tax rate 2018-19 2019-20
UK Personal Allowance 0% £0 – £11,850 £0 – £12,500
Starting Rate 19% £11,851 – £13,850 £12,501 – £14,549
Basic Rate 20% £13,851 – £24,000 £14,550 – £24,944
Intermediate Rate 21% £24,001 – £43,430 £24,945 – £43,430
Higher Rate 41% £43,431 – £150,000 £43,431 – £150,000
Top Rate 46% Over £150,000 Over £150,000


As with the rest of the UK, the personal allowance will be reduced by £1 for every £2 of income received over £100,000.

A Scottish taxpayer is a person who is resident in Scotland; it is not determined by the source of the income. Scottish income tax rates apply to income arising from employment, rental properties, profits from a trading business and income from discretionary trusts.  The rates do not apply to income from dividends or interest income.

As last year, the SNP are a minority government and therefore they will need the support of at least one other party to pass this Budget.

Land and Buildings Transaction Tax (LBTT)

Perhaps the biggest changes announced were to the Additional Dwellings Supplement which applies to the purchase of an additional residential property, similar to the additional 3% Stamp Duty Land Tax we have in England.  The minister announced this was increasing from 3% to 4% with an expected implementation date of 29 January 2019, subject to it getting through parliament.

There were some changes to non-residential LBTT charges too.  The lower rate of non-residential LBTT will be reduced from 3% to 1%, with the upper rate increased from 4.5% to 5% and with a reduced starting threshold of £250,000.

Posted: December 14th, 2018

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