Scottish Income Tax Rates – Additional Burden on Self-Employed Dentists

21 September 2018

The 2018/19 tax year will herald the introduction of the much-maligned Scottish rates of Income Tax and all the added complications that these bring. This is particularly relevant to Scottish resident, self-employed Dentists who will now be charged to tax at very different rates compared to the rest of the UK.

The Scottish Rates of Income Tax will only apply to non-savings income and therefore the tax payable on self-employed profits will be affected. Examples of the impact this will have on Scottish taxpayers is as follows:


Additional Tax from 2017/18

Additional Tax from Rest of UK










Assumes individuals are in receipt of the Personal Allowance

It can therefore be seen that the introduction of these rates will have a detrimental effect on higher rate taxpayers.

Whilst this transition sound simple enough, the real complications occur where an individual also receives dividends from shares or any other investment income as, you guessed it, these will be taxed at the same rates as the rest of the UK. In some circumstances, a mammoth eight different rates of income tax will have to be considered!

Additionally, Classes 2 & 4 National Insurance Contributions will also have to be paid on self-employed profits and these will remain in line with the rest of the UK.

Within our Specialist Healthcare team, we are perfectly placed to help you negotiate these particular Scottish tax challenges and explore all tax mitigation strategies, including incorporation for self-employed and partnership businesses, in order to narrow the broadening tax gap between Scotland and the rest of the UK.

For more information please contact Blair Hay ( or your usual AAB contact.

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