What is the Scottish intermediate income tax band at 21% and which earnings fall into it in 2026/27?

Full answer

The intermediate rate is unique to Scotland and forms one of six Scottish income tax bands for non-savings, non-dividend income (mainly salary, pensions and self-employment profits). Scotland's bands run: starter 19%, basic 20%, intermediate 21%, higher 42% (£31,092–£62,430 of taxable income), advanced 45% (£62,430–£125,140), and top 48% above that. The intermediate 21% band slots between the basic and higher rates and exists because the Scottish Government has chosen a more graduated structure than the rest of the UK. In practice the intermediate band applies to taxable income roughly between £26,560 and £43,662, sitting after your Personal Allowance of £12,570 (still set UK-wide and tapered away £1 for every £2 of income over £100,000). So a Scottish taxpayer earning around £40,000 will pay 19% on the first slice, 20% on the next, then 21% on earnings within the intermediate band. Worked example: on a £40,000 salary, the Personal Allowance covers £12,570, and the remaining £27,430 is split across the starter, basic and intermediate bands, with the top portion taxed at 21% rather than the 20% an equivalent earner in England, Wales or Northern Ireland would pay. The extra 1% over the basic rate is modest in cash terms but means mid-earners in Scotland pay slightly more than their counterparts elsewhere in the UK. Importantly, these Scottish rates only apply to earned income: savings interest and dividends are taxed at UK-wide rates everywhere (dividends 10.75%/35.75%/39.35%, with a £500 dividend allowance, and a £1,000/£500 Personal Savings Allowance). Your tax residence, signalled by an S tax code, determines whether Scottish rates apply, not where you work.

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