HM Insights

What does the recent Scottish Budget mean for taxpayers in Scotland?

Income tax

Current income tax rates will not increase, and the threshold at which people start paying the basic and intermediate rates will increase by the rate of inflation. The thresholds for the higher and upper rates will be frozen with Scottish Ministers calling this the 'fairest and most progressive income tax system in the UK'.


Lower earners continue to pay less tax than those in the rest of the UK; in 2019/20 the break even earnings were £26,993. The equivalent for 2020/21 is £27,243.

All earners will see another saving from the UK-wide increase in the National Insurance threshold from £8,632 to £9,500 annually. This will give an NIC saving of up to £104.16 per annum for employees and £78.12 for the self-employed.

The tax rates announced apply to the earnings of Scottish taxpayers only.

Rate and Band


Starter Rate 19%

£12,501 - £14,585

Basic Rate 20%

£14,550 - £25,158

Intermediate Rate 21%

£24,945 - £43,430

Higher Rate 41%

£43,431 - £150,000

Top Rate 46%

Over £150,000


The Personal Allowance, being the amount you can earn tax free, will be set by the UK Government on 11 March 2020. It is currently £12,500.   

Scottish Properties - Land & Business Transaction Tax & ADS

There will be no change to the rate of the Additional Dwelling Supplement, this will remain at 4%.

In addition, Land and Buildings Transaction Tax will remain as follows:

Non-residential Conveyances

Up to £150,000 = 0%

Above £150,000 to £250,000 = 1% 

Over £250,000 = 5%

Residential Conveyances

Up to £145,000 = 0%

Above £145,000 to £250,000 = 2% 

£250,001 to £325,000 = 5%

£325,001 to £750,000 = 10%

Over £750,000 = 12%

Non-Residential Leases

Existing non-residential LBTT rates and bands for conveyances will remain unchanged. However, the Scottish Government will introduce a new 2% band for non-residential leases, applying to transactions where the net present value (NPV) of rental income over the period of the lease is above £2 million.

The legislation will be introduced to the Scottish Parliament to enable this change to come into effect from 7 February 2020, but it will not apply if the contract for a transaction was entered into prior to 6 February 2020. In addition, the change will not apply to any further returns made in connection with the three-year review, assignation or termination of a lease where the effective date is between 1 April 2015 and 6 February 2020.


Get in touch

For legal advice regarding tax, please contact our Private Client Department.