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The Scottish tax trap: why it’s 67.5%, not 60%
The personal-allowance taper is set UK-wide. But Scotland taxes the recovered allowance at 45%, pushing the effective marginal rate to 67.5% rather than 60%.
Based on gov.scot (Scottish bands) and ITA 2007 s.35 (the UK-wide personal-allowance taper).
4 min read · Last reviewed
— In short
The Scottish tax trap reaches 67.5% because a taxpayer in the £100,000 to £125,140 band pays the 45% advanced rate, not the 40% higher rate. Each £1 of income is taxed at 45%, and the 50p of personal allowance it withdraws is taxed at 45% too — £0.675 of tax per £1. National Insurance at 2% lifts it to roughly 69.5%.
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The £100,000 personal-allowance trap is usually quoted as a 60% band. For a Scottish taxpayer it bites harder: 67.5%.
Two systems meeting at £100,000
The UK government sets the personal allowance and its withdrawal above £100,000, and both apply identically across Britain. But the rateat which earned income is taxed is devolved. In the £100,000–£125,140 band a Scottish taxpayer’s income falls in the 45% advanced rate. Each extra £1 of income is taxed at 45%, and the 50p of personal allowance it withdraws is taxed at 45% too — so £1 of income produces £0.675 of tax. That is the 67.5% effective marginal rate. National Insurance at 2% takes it to roughly 69.5%.
gov.scot — Scottish income tax rates and bands ; ITA 2007 s.35 — personal-allowance taper.
The escape is the same
Because the band is defined by adjusted net income, a gross pension contribution that brings adjusted net income back to £100,000 restores the allowance — and in Scotland the relief in the band is worth 67.5p in the £1. The tax trap calculator computes the Scottish figures when you switch the residence toggle.
Common questions
- Why is the Scottish tax trap 67.5% and not 60%?
- The personal-allowance withdrawal is UK-wide, but Scotland taxes income between £100,000 and £125,140 at the 45% advanced rate rather than 40%. 45% on the income plus 45% on the withdrawn allowance gives an effective 67.5%.
- Does the personal allowance taper apply in Scotland?
- Yes. The personal allowance and its withdrawal above £100,000 are set UK-wide and apply to Scottish taxpayers in full. Only the rate the income is taxed at differs.
Sources & grounding
Scottish income tax bands: gov.scot/publications/scottish-income-tax-rates-and-bands — starter 19% / basic 20% / intermediate 21% / higher 42% / advanced 45% / top 48%; income £75,001–£125,140 is in the advanced band.
Primary sources:gov.scot/publications/scottish-income-tax-rates-and-bands
Personal-allowance taper: ITA 2007 s.35 — UK-wide; £1 withdrawn per £2 over £100,000.
Primary sources:ITA 2007 s.35
The 67.5% figure: 45% advanced rate × 1.5 (the £1 of income plus the 50p of recovered allowance, both taxed at 45%).
For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.
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