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Tax allowances and amounts (Scotland)
This fact sheet covers Scotland. We also have a version for England & Wales if you need it.
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 2021/22 2022/23 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) £30,400 £31,400 Married couple's allowance (maximum amount) (4) £9,125 £9,415 Married couple's allowance (minimum amount) (5) £3,530 £3,640 Blind person's allowance £2,520 £2,600
(1) and (2) Since 2016/17 everyone is entitled to the same personal allowance and income limit, no matter when they were born.
(3) Where income is above this limit, the allowance is reduced by £1 for every £2 above the limit.
(4) and (5) The relief for married couple's allowance is given at 10%.
Income tax rates and bands
2021/22 2022/23 Scottish starter rate 19% Personal allowance - £2,097 Personal allowance - £2,162 Scottish basic rate 20% £2,097 - £12,726 £2,162 - £13,118 Scottish intermediate rate 21% £12,726 - £31,092 £13,118 - £31,092 Scottish higher rate 41% £31,092 - £150,000 £31,092 - £150,000 Scottish top rate 46% Over £150,000 Over £150,000
- From 6 April 2017 the bands and rates for Scottish Income Tax are 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.
- 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 2022/23.
- From 2020/21 tax relief for finance costs for individual landlords of residential properties is fully restricted to the basic rate only. For more information about the changes which were phased in from 2017/18, see HM Revenue and Customs guidance on Tax relief for residential landlords: how it's worked out.
National Insurance contributions class 2 and class 4
2021/22 2022/23 Class 2 £3.05pw £3.15pw Class 2 - Small profits threshold (6) £6,515pa £6,725pa Class 4 - Lower profits limit £9,568pa £11,908pa Class 4 - Upper profits limit £50,270pa £50,270pa Class 4 - Rate between upper and lower profits limit (7) 9% 9.73% Class 4 - Rate above upper profits limit (8) 2% 2.73%
(6) In the Spring Statement, government announced that from April 2022 self-employed individuals will not pay class 2 National Insurance contributions on profits between the Small profits threshold and the Lower profits limit, but will continue to be able to build up National Insurance credits. For more information, see GOV.UK.
(7) and (8) Class 4 contributions are calculated yearly. The 2022/23 figures include a blended rate which takes into account the 1.25% uplift that was in place until 6 November 2022 to fund the NHS, health and social care.
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.
If you prefer, you can use our online budget to do the income tax and National Insurance calculations for you.
Estimated monthly income tax calculation for 2022/23
1. Insert 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 £2,162 of Figure D by 19% to work out how much Scottish starter rate tax you need to pay £410.78 E 6. Multiply the next £10,956 of Figure D by 20% to work out how much Scottish basic rate tax you need to pay £2,191.20 F 7. Multiply the next £17,974 of Figure D by 21% to work out how much Scottish intermediate rate tax you need to pay £3,774.54 G 8. Take away £31,092 from Figure D and multiply the answer by 41% 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) £3,008.58 H 9. Add together Figure E, Figure F, Figure G and Figure H to get an estimate of your yearly tax liability £9,385.10 I 10. Divide Figure I by 12 to get an estimate of your monthly tax liability £782.09 J
Use J £782.09 as the Estimated tax figure on Your business and household budget sheet.
Estimated monthly National Insurance contribution calculations for 2022/23
Class 4 National Insurance contributions
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 £11,908 (the lower profits limit) £38,362 J 3. Figure J multiplied by 9.73% (the rate payable between the lower and upper limits) £3.732.62 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 2.73% (the rate payable above upper limit) £19.93 M 6. Add together Figure K and Figure M to get your estimated yearly amount of class 4 contribution £3,752.55 N 7. Divide Figure N by 12 to get your estimated monthly class 4 contribution £312.71 O
Use O £312.71 as the National Insurance class 4 figure on Your business and household budget sheet.
Class 2 National Insurance contributions
If you have to pay Class 2 National Insurance contributions, or decide to do so voluntarily, use a flat rate of £13.65 per month (£3.15 per week) as the Class 2 National Insurance contribution figure on Your business and household budget sheet.
2021/22 2022/23 Main rate 19% 19%
From 1 April 2015, there is a single corporation tax rate for non-ring fence profits.
Value added tax (VAT)
2021/22 2022/23 Standard rate 20% 20% Reduced rate 5% 5% Zero rate 0% 0% Registration level £85,000 £85,000 De-registration level £83,000 £83,000
Making Tax Digital for VAT was introduced on 1 April 2019 for businesses with a taxable turnover above the VAT registration threshold. From 1 April 2022, unless HMRC has given 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 www.gov.uk.
National Insurance contributions class 1
Thresholds 2021/22 2022/23 Lower earnings limit primary class 1 £120pw £123pw Upper earnings limit primary class 1 £967pw £967pw Primary threshold (from 6 April 2022 to 5 July 2022) £184pw £190pw Primary threshold (from 6 July 2022 to 5 April 2023) £184pw £242pw Secondary threshold £170pw £175pw
Employee rates 2021/22 2022/23 Class 1 rate between primary threshold and upper earnings limit (from 6 April 2022 to 5 November 2022) 12% 13.25% Class 1 rate between primary threshold and upper earnings limit (from 6 November 2022 to 5 April 2023) 12% 12% Class 1 rate above upper earnings limit (from 6 April 2022 to 5 November 2022) 2% 3.25% Class 1 rate above upper earnings limit (from 6 November 2022 to 5 April 2023) 2% 2%
Employer rates 2021/22 2022/23 Secondary class 1 rate above second threshold (from 6 April 2022 to 5 November 2022) (9) 13.8% 15.05% Secondary class 1 rate above second threshold (from 6 November 2022 to 5 April 2023) (10) 13.8% 13.8% Class 1A rate on employer provided benefits (11) 13.8% 14.53%
(9) and (10) 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.
(11) Class 1A contributions are calculated yearly. The 2022/23 figure includes a blended rate which takes into account the 1.25% uplift that was in place until 6 November 2022 to fund the NHS, health and social care.