How is my tax position affected by where I live?

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The Scottish Government were given powers to set a Scottish rate of income tax to apply to Scottish taxpayers from 6 April 2016. They were then given additional powers from 2017/18 onwards to vary the tax rates for existing bands and to alter or introduce tax bands.

From 6 April 2019, the National Assembly of Wales were given powers to set a Welsh rate of income tax to apply to Welsh taxpayers. They cannot set tax bands though, so the point at which Welsh taxpayers start to pay higher and additional rates of income tax will be the same in 2019/20 as in England and Northern Ireland. Find out more [link to www.aegon.co.uk/writ]

Neither the Scottish Government nor the Welsh Assembly has the power to alter the personal allowance though – this is still set by the UK Government.

You can find out more(Opens new window) about income tax bands and rates by visiting https://www.gov.uk/income-tax-rates(Opens new window)

The table below shows the tax position for the most common transactions:

Tax position for the most common transactions
  England & NI Wales Scotland
Tax relief on:
personal pension contributions Basic Basic Basic
Tax payable on:
annuity income Marginal Marginal Marginal
drawdown income Marginal Marginal Marginal
uncrystallised funds pension lump sums Marginal Marginal Marginal
small pots lump sums Marginal Marginal Marginal

Notes

  1. Contributions that you make to personal pensions are paid net of basic rate tax. The basic rate of income tax is currently 20% in England and Northern Ireland, Wales, and Scotland. So, a contribution of £80 net will result in £100 gross being invested into your personal pension after the addition of £20 tax relief. If you pay tax at a rate higher than basic rate, you can contact HM Revenue & Customs (HMRC) to reclaim any additional tax relief through your yearly tax return or tax coding. The value of any tax relief depends on individual circumstances.
  2. The marginal rate of tax is the highest rate that you will pay. Where you’re due to pay tax at your marginal rate on any taxable income or lump sums, we’ll use the tax code supplied by HMRC, if we have one. Otherwise, we’ll use the UK emergency tax code or basic rate, according to HMRC guidelines. Youcan contact HMRC if there is any under or over payment of tax on the income or lump sum you’ve received.
  3. Find out more about tax on your pension income
  4. Tax on UK dividends and savings interest will continue to be paid at UK rates.

The information on this page is based on our understanding of current, taxation law and HMRC practice, which may change.