How is savings interest taxed in Scotland?

At the same rates as the rest of the UK. Scottish income tax bands apply to wages, pensions and most other income, but savings interest is taxed at 20%, 40% or 45% in 2026/27, and whether you get a £1,000 or £500 personal savings allowance is decided by the UK bands.

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Scottish taxpayers and savings interest

Rates: 20%, 40% and 45% in 2026/27, rising to 22%, 42% and 47% from 6 April 2027. HMRC says the April 2027 rates apply UK-wide.
Personal savings allowance: £1,000, £500 or nothing. The law tests your band as if you were not a Scottish taxpayer (Income Tax Act 2007, section 12B), so the UK higher rate threshold of £50,270 decides it.
Starting rate for savings: Up to £5,000 of interest at 0%, on the same terms as the rest of the UK. HMRC's rates table shows it for Scotland.
Scottish bands: The starter, basic, intermediate, higher, advanced and top rates apply to earnings, pensions and most other taxable income.

An example

A Scottish taxpayer earns £45,000 and has £500 of interest. Their earnings above £43,662 are taxed at the Scottish higher rate of 42%.

For savings, their total of £45,500 is below the UK threshold of £50,270, so they are a basic rate taxpayer for this purpose. Their personal savings allowance is £1,000 and covers all £500 of the interest.

ISAs in Scotland

ISAs work the same way across the UK. Interest on a cash ISA is paid without tax and does not use your personal savings allowance, and you can pay into more than one ISA in a year within the £20,000 total: Can I have more than one ISA? From 6 April 2027 anyone under 65 can pay no more than £12,000 a year into cash ISAs: What is changing with cash ISAs in April 2027?

A Scottish taxpayer pays 42% on earnings above £43,662 and can still have the full £1,000 personal savings allowance.

Where this fits

In Scotland your earnings and your savings can fall in different bands, which matters when you decide whose name savings are held in.

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The advisers for this subject

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Tony Springer

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