Scottish income tax bands 2025/26
Scotland sets its own income tax on earnings and self-employed profit. The personal allowance (£12,570) is UK-wide; above it, Scotland uses six bands:
| Band | Rate | Taxable income |
|---|---|---|
| Personal allowance | 0% | Up to £12,570 |
| Starter rate | 19% | £12,571 – £14,876 |
| Basic rate | 20% | £14,877 – £26,561 |
| Intermediate rate | 21% | £26,562 – £43,662 |
| Higher rate | 42% | £43,663 – £75,000 |
| Advanced rate | 45% | £75,001 – £125,140 |
| Top rate | 48% | Over £125,140 |
What this means for contractors
Because only income tax is devolved, the impact depends on how you're paid:
- Inside IR35 / umbrella — your whole salary is taxed at Scottish rates, so this is where the difference shows. At £500/day over 220 days, a Scottish umbrella contractor takes home roughly £3,091 less per year than in the rest of the UK.
- Outside IR35 / limited company — with a low director's salary plus dividends, you're almost unaffected: dividends are taxed at UK rates everywhere, and a £12,570 salary is within the personal allowance either way.
- Sole trader — your profit is taxed at Scottish income tax rates, so Scottish self-employed contractors see the difference too. Try the sole trader calculator.
Frequently asked questions
How is Scottish contractor tax different?
Only income tax on your salary or self-employed profit is devolved to Scotland, and it has six bands (19% to 48%) instead of the rest-of-UK's three. National Insurance, dividend tax and corporation tax are the same across the whole UK, so a limited company contractor drawing a low salary plus dividends is barely affected, while umbrella (inside IR35) and sole trader contractors feel the difference most.
Do Scottish contractors pay more tax?
Middle and higher earners generally pay a little more income tax in Scotland — the higher rate is 42% versus 40% in the rest of the UK, and there's a 45% advanced rate and 48% top rate. Lower earners can pay slightly less thanks to the 19% starter rate.
Are dividends taxed differently in Scotland?
No. Dividend tax is not devolved, so Scottish taxpayers pay the same UK dividend rates (8.75%, 33.75%, 39.35%) and use the same UK bands. This is why a limited company's salary-plus-dividends take-home is almost identical in Scotland and the rest of the UK.