For the 2026/27 tax year, an individual who is a Scottish taxpayer for Income Tax purposes has non-savings, non-dividend income that falls within the £43,663 to £75,000 band. Which statement correctly describes the tax treatment of that band of income, compared with the same band of non-savings, non-dividend income earned by a taxpayer resident elsewhere in the UK?
- The Scottish taxpayer's income in this band is charged at the Scottish Higher Rate of 42%, a higher rate than the 40% Higher Rate that applies to the same band of non-savings, non-dividend income for a taxpayer resident elsewhere in the UK
- The Scottish taxpayer pays exactly the same 40% rate on this band, because Scottish Income Tax rates only diverge from the rest of the UK on savings and dividend income, not on earned income
- The Scottish taxpayer's dividend and savings income falling in this range is also charged at the Scottish 42% rate, because Scottish rates apply to all forms of income equally
- Because Scotland uses six income tax bands instead of the rest of the UK's three, income in this £43,663-£75,000 range actually falls into the Scottish Basic Rate, not a higher-rate band at all
Why A? And why not the others?
Correct answer: A. The Scottish taxpayer's income in this band is charged at the Scottish Higher Rate of 42%, a higher rate than the 40% Higher Rate that applies to the same band of non-savings, non-dividend income for a taxpayer resident elsewhere in the UK
Scottish Income Tax applies its own set of bands and rates to the non-savings, non-dividend income of Scottish taxpayers; for 2026/27 income from £43,663 to £75,000 falls within the Scottish Higher Rate band and is charged at 42%, two percentage points above the 40% Higher Rate that applies to the equivalent band of non-savings, non-dividend income for a taxpayer resident elsewhere in the UK, matching the correct option. The option claiming the same 40% rate applies is wrong because Scottish rates diverge from the rest of the UK specifically on earned and other non-savings, non-dividend income, which is exactly the category described here. The option extending the 42% rate to dividend and savings income is wrong because Scottish Income Tax rates and bands apply only to non-savings, non-dividend income; savings interest and dividends are taxed at the same rates UK-wide regardless of where the taxpayer lives. The option placing this income in the Scottish Basic Rate band is wrong because, despite Scotland's extra bands, £43,663-£75,000 sits within the Scottish Higher Rate band, not the lower Basic Rate band that ends well before that range.
Source: GOV.UK: Scottish Income Tax