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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 2020/21 2021/22 Personal allowance (1) £12,500 £12,570 Income limit for personal allowance (2) £100,000 £100,000 Income limit for married couple's allowance (3) £30,200 £30,400 Married couple's allowance (maximum amount) (4) £9,075 £9,125 Married couple's allowance (minimum amount) (5) £3,510 £3,530 Blind person's allowance £2,500 £2,520
(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
2020/21 2021/22 Scottish starter rate 19% Personal allowance - £2,085 Personal allowance - £2,097 Scottish basic rate 20% £2,085 - £12,658 £2,097 - £12,726 Scottish intermediate rate 21% £12,658 - £30,930 £12,726 - £31,092 Scottish higher rate 41% £30,930 - £150,000 £31,092 - £150,000 Scottish top rate 46% Over £150,000 Over £150,000
- Since 6 April 2017, the bands and rates for Scottish Income Tax have been set by the Scottish Government.
- From 2018/19 onwards, the Scottish Government introduced the Scottish starter rate and Scottish intermediate rate.
- The amount of personal allowance (how much profit you can earn before paying tax) is the same in Scotland, England and Wales.
- 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 2021/22.
- Since 2017/18, tax relief has been restricted to the basic rate only for finance costs for landlords of residential properties. For more information, see HM Revenue and Customs guidance on Tax relief for residential landlords: how it's worked out.
Scottish Income Tax
The Scottish Government sets its own income tax rates and tax thresholds for:
- non-savings income; and
- non-dividend income.
Some of the rates and thresholds are currently different to those set in England and Wales.
National Insurance contributions
2020/21 2021/22 Class 2 £3.05pw £3.05pw Class 2 - Small profits threshold £6,475pa £6,515pa Class 4 - Lower profits limit £9,500pa £9,568pa Class 4 - Upper profits limit £50,000pa £50,270pa Class 4 - Rate between upper and lower profits limit 9% 9% Class 4 - Rate above upper profits limit 2% 2%
Example calculations for estimated monthly income tax and National Insurance contributions for 2021 to 2022
- If you are under retirement age and either a sole trader or a partner in a partnership, these examples will help you work out the estimated monthly income tax and estimated National Insurance that 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 this example, the figure worked out on the business budget sheet for Drawings (what your profit is before tax and National Insurance) is £4,250 per month.
- This example 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
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 £2,097 of Figure D by 19% to work out how much Scottish starter rate tax you need to pay £398.43 E 6. Multiply the next £10,629 of Figure D by 20% to work out how much Scottish basic rate tax you need to pay £2,125.80 F 7. Multiply the next £18,366 of Figure D by 21% to work out how much Scottish intermediate rate tax you need to pay £3,856.86 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 £9,389.67 I 10. Divide Figure I by 12 to get an estimate of your monthly tax liability £782.47 J
Use J £782.47 as the Estimated tax figure on Your business and household budget sheet.
Estimated National Insurance contributions
Class 2 National Insurance contributions
Use a flat rate of £13.22 per month (£3.05 per week) as the National Insurance class 2 figure on Your business and household budget sheet.
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 K 2. Figure K minus £9,568 (the lower profits limit) £40,702 L 3. Figure L multiplied by 9% (the rate payable between the lower and upper limits) £3,663.18 M 4. Figure B from above minus £50,270 (if the answer is less than 0, insert 0) £730 N 5. Figure N multiplied by 2% (the rate payable above upper limit) £14.60 O 6. Add together Figure M and Figure O to get your estimated yearly amount of class 4 contribution £3,677.78 P 7. Divide Figure P by 12 to get your estimated monthly class 4 contribution £306.48 Q
Use Q £306.48 as the National Insurance class 4 figure on Your business and household budget sheet.
2020/21 2021/22 Main rate 19% 19%
From 1 April 2015, there is a single corporation tax rate for non-ring fence profits.
Value added tax (VAT)
2020/21 2021/22 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 threshold of £85,000. For more information, go to www.gov.uk.
National Insurance contributions class 1
Directors and employees 2020/21 2021/22 Lower earnings limit primary class 1 £120pw £120pw Upper earnings limit primary class 1 £962pw £967pw Primary threshold £183pw £184pw Secondary threshold £169pw £170pw
Rates 2020/21 2021/22 Class 1 rate between primary threshold and upper earnings limit 12% 12% Class 1 rate above upper earnings limit 2% 2% Class 1A rate on employer provided benefits 13.8% 13.8%
Employers' rates 2020/21 2021/22 Secondary class 1 rate above second threshold 13.8% 13.8%