Are my dividends and savings interest taxed at Scottish rates or UK rates in 2026/27?

Full answer

The Scottish Parliament only has power over the rates and bands applied to non-savings, non-dividend (NSND) income — broadly your earnings, pensions and rental profit. Savings interest and dividend income remain taxed under the UK-wide rates set by Westminster, wherever you live in the UK. This is true for Scotland, Wales and Northern Ireland alike. For 2026/27, dividends carry a £500 dividend allowance, then are taxed at 8.75% (basic), 33.75% (higher) and 39.35% (additional). Savings interest benefits from the Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 higher, £0 additional) plus the starting rate for savings (up to £5,000 where other income is low), then is taxed at 20%, 40% and 45%. These are the same figures a taxpayer in England would use. The complication for Scottish taxpayers is working out which UK band your savings or dividends fall into. To do this, HMRC stacks your income: earnings first, then savings, then dividends. But to set the band thresholds for savings and dividends, HMRC uses the UK higher-rate threshold (£50,270), not the Scottish higher-rate threshold (£43,662). So even though your salary may be taxed at the Scottish 42% higher rate from £43,662, your savings and dividends only tip into the 40%/33.75% bands once total income exceeds £50,270. Example: a Scottish taxpayer with £45,000 salary plus £2,000 dividends pays Scottish rates on the salary, but the dividends (after the £500 allowance) are taxed at the UK basic dividend rate of 8.75%, because total income stays under £50,270. Wales (WRIT) follows the same split, currently matching UK main rates.

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