From the start of the new tax year, April 6th 2017, Scottish taxpayers will start to pay taxes based upon new rules set by Holyrood. Only income tax was devolved so National Insurance rates will still remain the same as UK.
Last year's draft Budget outlined that the rates for people in Scotland would remain on par with the rest of the UK but from the start of this month one important change has been made.
In a major move to add confusion to the already complex tax system, people in Scotland will no longer benefit from the increase of the higher rate threshold the rest of the UK receives.
At the moment (2016) the higher rate band kicks in after £32,000 of post-tax allowance income. For the UK this will rise to £33,500 from this April - a rise of £1,500. Couple this with the personal allowance rise to £11,500 and you have to earn £45,000 gross before paying the higher rate of tax.
For Scottish taxpayers the higher rate threshold figure will actually be cut to lower than 2016 - so £31,500. This means that with the raise in the personal allowance, people in Scotland will pay higher rate income tax on gross incomes over £43,000. Essentially freezing the higher rate threshold to 2016 levels and a cut in real money terms.
The complexity comes in when you factor that the lower than rest of UK higher rate threshold only applies to income from employment, self employment etc and income from other sources gets the extra £2,000 before the higher rate kicks in.
For people with multiple income sources where there is a mixture of employment income, and others such as savings, dividend or capital gains there will need to be parallel calculation of both bands to make sure the correct rate of tax is applied.