Budget analysis

For intermediaries only

14 January 2019 Back to results

Scottish Budget 2019/20

The Scottish Government unveiled its tax and spending plans for the 2019/20 tax year on 12 December 2018. The budget proposals still need to be passed by the Scottish Parliament – the debates and votes will take place in early 2019.

It was announced that the five existing Scottish rates of income tax will remain the same as they were for 2018/19 (see table below for details). The thresholds for the starter, basic and intermediate tax bands will increase in line with inflation, while the thresholds for the higher and top-rate tax bands will be frozen at their 2018/19 levels. You can find a summary of the proposed changes in the table below.

Summary of the proposed changes to the Scottish rate of income tax.
Band name	Tax rates (%)	Tax thresholds 2018/19	Tax thresholds 2019/20
Starter	19	Over £11,850¹ to £13,850	Over £12,500¹ to £14,549
Basic	20	Over £13,850 to £24,000	Over £14,549 to £24,944
Intermediate	21	Over £24,000 to £43,430	Over £24,944 to £43,430
Higher	41	Over £43,430 to £150,000²	Over £43,430 to £150,000²
Top	46	Above £150,000²	Above £150,000²

¹Assumes the person is receiving the standard UK Personal Allowance for tax-free income of £11,850 in 2018/19 and £12,500 in 2019/20.

²Personal Allowance is reduced by £1 for every £2 earned over £100,000.

Further details of the Scottish Budget can be found on the Scottish Government website(Opens new window).

Autumn Budget 2018

For our analysis of the Autumn Budget 2018 see below:

Autumn Budget 2018 - initial analysis (PDF)(Opens new window)(Opens new window)

Autumn Budget 2017

For our analysis of the Autumn Budget, see below:

Autumn Budget 2017 – initial analysis (PDF)(Opens new window)

Finance Act 2017 update – May 2017 update

Due to the forthcoming General Election on 8 June 2017, there has been a revision to the Finance Act 2017. The position of some of the topics we covered in our Spring Budget 2017 – Initial analysis paper has changed. You can read below what has changed. It’s important to note that following the General Election the new government may include some or all of the removed clauses in another Finance Bill and these could be introduced retrospectively.

Reduction in the money purchase annual allowance (MPAA) - the government had intended to reduce the MPAA limit from £10,000 per year to £4,000 per year with effect from 6 April 2017. The legislation to enact this has been removed. Although the current government still intends to proceed with the reduction at the earliest opportunity after the election, it’s not clear when this will take effect from.

Dividend allowance - the dividend tax-free allowance was due to reduce to £2,000 from April 2018. This legislation has been removed.

Rectification on part surrenders and part assignments from investment bonds - the Finance Bill 2017 originally included a clause allowing policyholders to apply to have chargeable event calculations reviewed by HMRC. As this clause has been removed, this review won’t be possible unless the removed legislation is included in a future a Finance Bill.

March Budget 2017 – update 15 March 2017

National Insurance for the self-employed – on budget day, the Chancellor announced that the main rate of class 4 National Insurance Contributions was to rise from 9% to 10% in April 2018 and then by a further 1% in April 2019. On 15 March 2017, there was a U-turn on this decision and it was reversed so there will be no increase in April 2018 and April 2019 because of the Spring Budget 2017.