Tax allowances and amounts (Scotland)

This fact sheet tells you about the current tax rates and allowances.

Use this fact sheet to find out about:

• personal allowances for income tax;
• income tax rates and bands;
• National Insurance contributions for sole traders and partners in a business partnership;
• National Insurance contributions for directors of limited companies and employees;
• corporation tax; and
• value added tax (VAT).

Income tax allowances

Personal allowances	2024/25	2025/26
Personal allowance (1)	£12,570	£12,570
Income limit for personal allowance (2)	£100,000	£100,000
Income limit for married couple's allowance (3)	£37,000	£37,700
Married couple's allowance (maximum amount) (4)	£11,080	£11,270
Married couple's allowance (minimum amount) (5)	£4,280	£4,360
Blind person's allowance	£3,070	£3,130

Notes

(1) and (2) If your adjusted net income is above £100,000, your Personal allowance is reduced by £1 for every £2 above this figure.

(3) Where income is above this figure, the relief for Married couple's allowance is reduced by £1 for every £2 above this figure.

(4) and (5) The relief for Married couple's allowance is given at 10%.

Income tax rates and bands

	2024/25	2025/26
Scottish starter rate 19%	Up to £2,306	Up to £2,827
Scottish basic rate 20%	Above £2,306 up to £13,991	Above £2,827 up to £14,921
Scottish intermediate rate 21%	Above £13,991 up to £31,092	Above £14,921 up to £31,092
Scottish higher rate 42%	Above £31,092 up to £62,430	Above £31,092 up to £62,430
Scottish advanced rate 45%	Above £62,430 up to £125,140	Above £62,430 up to £125,140
Scottish top rate 48%	Above £125,140	Above £125,140

• Income tax is paid on the amount of taxable income remaining after you have deducted any allowances you are entitled to, such as the Personal allowance and Blind person’s allowance.

• Your personal allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above for tax years 2024/25 and 2025/26.

• Since 6 April 2017 the bands and rates for Scottish Income Tax have been set by the Scottish Government. These differ from those set in England and Wales.

• From 2018/19 the Scottish Government introduced the Scottish starter rate and Scottish intermediate rate.

• From 2024/25 the Scottish Government introduced the Scottish advanced rate.

• Tax relief for finance costs for individual landlords of residential properties is fully restricted to the Basic rate only.

• From 2025/26 tax relief for finance costs for individual landlords of furnished holiday lets is also fully restricted to the Basic rate only.

National Insurance contributions class 2 and class 4

	2024/25	2025/26
Class 2 (6)	£3.45pw	£3.50pw
Class 2 - Small profits threshold	£6,725pa	£6,845pa
Class 4 - Lower profits limit	£12,570pa	£12,570pa
Class 4 - Upper profits limit	£50,270pa	£50,270pa
Class 4 - Rate between upper and lower profits limit	6%	6%
Class 4 - Rate above upper profits limit	2%	2%

Notes

(6) From 2024/25 self-employed individuals no longer have to pay Class 2 National Insurance contributions. Although, self-employed individuals with profits below the Small profits threshold can make voluntary contributions.

Example calculations

• If you are under retirement age and either a sole trader or a partner in a partnership, the following examples will help you work out an estimate of the monthly income tax and National Insurance you should pay on your profit from your business.

• You will then be able to work out your Available drawings from your business. This will help you work out your household budget to show you what you have available to pay your creditors.

• In the following examples, the figure taken from the business budget sheet for Drawings (what your profit is before tax and National Insurance) is £4,250 per month.

• The example calculations should not be used for income from residential properties or furnished holiday lets.

Estimated monthly income tax calculation for 2025/26

1.	Take the monthly Available drawings figure from Your business and household budget sheet	£4,250	A
2.	Multiply Figure A by 12 to get your yearly drawings figure	£51,000	B
3.	Insert your Personal allowance for income tax figure	£12,570	C
4.	Take Figure C (your Personal allowance for income tax) away from Figure B (your yearly drawings) to work out what part of your drawings you pay tax on	£38,430	D
5.	Multiply the first £2,827 of Figure D by 19% to work out how much Scottish starter rate tax you need to pay	£537.13	E
6.	Multiply the next £12,094 of Figure D by 20% to work out how much Scottish basic rate tax you need to pay	£2418.80	F
7.	Multiply the next £16,171 of Figure D by 21% to work out how much Scottish intermediate rate tax you need to pay	£3,395.91	G
8.	Take away £31,092 from Figure D and multiply the answer by 42% to work out how much Scottish higher rate tax you need to pay (you only need to do this step if Figure D is more than £31,092)	£3,081.96	H
9.	Add together Figure E, Figure F, Figure G and Figure H to get an estimate of your yearly tax liability	£9,433.80	I
10.	Divide Figure I by 12 to get an estimate of your monthly tax liability	£786.15	J

Use J £786.15 as the Estimated tax figure on your business and household budget sheet.

Estimated Class 4 National Insurance contribution calculations for 2025/26

1.	Use Figure B from above (unless Figure B is more than the Upper profits limit of £50,270, then insert £50,270)	£50,270	I
2.	Figure I minus £12,570 (the Lower profits limit)	£37,700	J
3.	Figure J multiplied by 6% (the rate payable between the lower and upper limits)	£2,262	K
4.	Figure B from above minus £50,270 (if the answer is less than 0, insert 0)	£730	L
5.	Figure L multiplied by 2% (the rate payable above the Upper profits limit)	£14.60	M
6.	Add together Figure K and Figure M to get your estimated yearly amount of Class 4 contribution	£2,276.60	N
7.	Divide Figure N by 12 to get your estimated monthly Class 4 contribution	£189.72	O

Use O £189.72 as the National Insurance class 4 figure on your business and household budget sheet.

National Insurance contributions class 1

Thresholds

	2024/25	2025/26
Lower earnings limit primary class 1	£123pw	£125pw
Upper earnings limit primary class 1	£967pw	£967pw
Primary threshold	£242pw	£242pw
Secondary threshold	£175pw	£96pw

Employee rates

	2024/25	2025/26
Class 1 rate between primary threshold and upper earnings limit	8%	8%
Class 1 rate above upper earnings limit	2%	2%

Employer rates

	2024/25	2025/26
Secondary class 1 rate above secondary threshold	13.8%	15%
Class 1A rate on employer provided benefits	13.8%	15%

For information about National Insurance thresholds and rates that apply to special categories, such as for employers of qualifying veteran, freeport and apprentice employees, see GOV.UK.

If your business is eligible for the Employment Allowance, you may be able to reduce your employers' National Insurance liability. For more information, see GOV.UK

Corporation tax

For non-ring fence profit

	2024/25	2025/26
Main rate (companies with profits over £250,000)	25%	25%
Small profits rate (companies with profits under £50,000)	19%	19%
Marginal relief lower limit	£50,000	£50,000
Marginal relief upper limit	£250,000	£250,000
Marginal relief fraction	3/200	3/200

Since 1 April 2023, if your company has taxable profits between £50,000 and £250,000, you may be able to claim marginal relief to reduce your corporation tax rate from the 25% main rate. Use the GOV.UK calculator to work out how much marginal relief you can claim.

Value added tax (VAT)

	2024/25	2025/26
Standard rate	20%	20%
Reduced rate	5%	5%
Zero rate	0%	0%
Registration level	£90,000	£90,000
De-registration level	£88,000	£88,000

Unless HMRC gives an exemption from doing so, all VAT registered businesses must be signed up to Making Tax Digital for VAT whatever their turnover. For more information, go to GOV.UK.