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Scottish income tax changes approved

The Scottish government has approved an overhaul of the Scottish income tax system, which will introduce new rates and bands from 6 April 2018.

Under the new system, most taxpayers in Scotland will fall into one of 5 income tax bands, following the introduction of 2 new bands either side of the basic rate.

The new bands due to be added are a starter rate of 19p for those earning between £11,851 and £13,850, and an intermediate rate of 21p for earnings between £24,001 and £44,430.

Members of the Scottish parliament voted in favour of the proposals, which were drafted in December's Scottish Budget 2017, by 67 votes to 50.

Finance secretary Derek Mackay said 70% of taxpayers in Scotland will pay less income tax as a result of the reforms.

Mackay said:

"Our progressive approach to reforming income tax will deliver greater tax fairness and protect the lowest earning taxpayers in Scotland."

Scottish bands Taxable income 2018/19  Rate  Taxable income 2017/18   Rate
Personal allowance  Up to £11,850 0%  Up to £11,500  0%
Starter rate £11,851* to £13,850  19% n/a  
Basic rate  £13,851 to £24,000 20%  £11,501 to £43,000  20% 
Intermediate rate   £24,001 to £44,430 21%  n/a   
Higher rate  £44,431 to £150,000** 41%  £43,001 to £150,000   40%
Top rate  Above £150,000** 46%  Above £150,000   45%

* Assumes individuals are in receipt of the personal allowance.
** Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.

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