The Scottish Budget 2021-22

29 January 2021

The Scottish Budget for 2021-22 has been delivered but what does it mean for the Scottish taxpayer?

Scottish Income Tax

For the 2021-2022 tax year, the Scottish Income tax rates will remain the same, however the tax bandings will increase at the rate of inflation (0.5%). This is except for the top rate band which is being held at £150,000. As a result, all Scottish taxpayers will pay slightly less Income Tax in 2021-22 than in the previous year. The rates and bands for 2020-21 are as follows:

 

Band name

Band

Rate

Starter Rate

£12,570* - £14,667

19%

Basic Rate

£14,667 - £25,296

20%

Intermediate Rate

£25,296 - £43,662

21%

Higher Rate

£43,662 - £150,000

41%

Top Rate

Over £150,000

46%

 

*Assumes individuals are in receipt of the Standard UK Personal Allowance

Personal allowances were not increased to £12,750 as was previously intended, due to the current economic climate. Scottish Taxpayers will however have their personal allowance increased to £12,570 effective from April 2021. Those earning in excess of £100,000 will still see their personal allowance reduced by £1 for every £2 earned over £100,000.

Property Tax

The change to Land and Buildings Transaction Tax (LBTT) which was introduced in July 2020, whereby the nil rate band was temporarily increased to £250,000, will revert to £145,000. This is effective from 1 April 2021.

For first-time buyers, the additional relief will still be available, the relief will enable the extension of the nil rate band to £175,000.

Additional Dwelling Supplement (ADS) remains at 4%. The timeframe in which your previous main residence is to be sold to reclaim the ADS is unchanged at 18 months, further consultation is to be held regarding extending this timeframe.

 

If you are affected by any of the above or would like any further information please contact Andrea Begg or your usual AAB contact.

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