Tax on interest
Savings tax for Scottish taxpayers: UK rules on interest
Enter your income other than savings and your taxable interest. The tool applies the Scottish rates to pay or pension and the UK savings rates and bands to the interest, as the law requires.
Interest tax for a Scottish taxpayer
Tax on the interest, 2026/27
£100.00
| Tax on the interest, 2027/28 | £110.00 |
| Allowance on savings (UK bands) | £1,000 |
| Scottish rate on your last £ of pay | higher, 42 % |
Savings interest is taxed at UK rates and bands even in Scotland; only wages and pensions use the Scottish rates.
Scottish rates of income tax apply only to wages, pensions, profits and rent. Savings interest of a Scottish taxpayer is taxed at the UK savings rates and on the UK bands: section 11D of the Income Tax Act 2007 says so in terms, and the Personal Savings Allowance test in section 12B also uses the UK bands. In 2026/27 that means 20 %, 40 % and 45 % on interest above the allowances, the same £5,000 starting rate and an allowance of £1,000 until total income passes £50,270. A Scot on £45,000 pays the Scottish higher rate of 42 % on the top slice of their salary, yet for savings they are still a basic rate taxpayer: on £1,500 of interest they keep the £1,000 allowance and pay £100.00. From 6 April 2027 the UK savings rates rise to 22 %, 42 % and 47 % in Scotland too; Scottish rates for 2027/28 are not yet set.
Sums checked by Radif Partners · Editorial policy · How the sums are done
Two sets of rates on one income
Scotland sets its own rates and bands for non-savings income. For 2026/27 they are listed on the GOV.UK page on Income Tax in Scotland, and they apply on top of the UK Personal Allowance of £12,570.
| Scottish band | Income before tax | Rate |
|---|---|---|
| starter | £12,571 to £16,537 | 19 % |
| basic | to £29,526 | 20 % |
| intermediate | to £43,662 | 21 % |
| higher | to £75,000 | 42 % |
| advanced | to £125,140 | 45 % |
| top | over £125,140 | 48 % |
None of these rates touches interest. Section 11D of the Income Tax Act 2007 provides that the savings income of a Scottish taxpayer is charged at the savings basic, higher and additional rates of the UK, with the UK basic and higher rate limits deciding which slice falls where. The interest still sits on top of the salary, so the salary uses up UK band space first, but the Scottish thresholds play no part.
What it means at different incomes
| Scottish income | Scottish band of the last £ of pay | Savings allowance | Tax on £1,500, 2026/27 | Same, 2027/28 |
|---|---|---|---|---|
| £25,000 | basic, 20 % | £1,000 | £100.00 | £110.00 |
| £40,000 | intermediate, 21 % | £1,000 | £100.00 | £110.00 |
| £45,000 | higher, 42 % | £1,000 | £100.00 | £110.00 |
| £50,000 | higher, 42 % | £500 | £400.00 | £420.00 |
| £60,000 | higher, 42 % | £500 | £400.00 | £420.00 |
| £80,000 | advanced, 45 % | £500 | £400.00 | £420.00 |
The rows between £43,663 and £50,270 are the ones that surprise people. Their pay is already taxed at 42 %, the Scottish higher rate, but their interest is taxed as if they were basic rate taxpayers: the full £1,000 allowance, then 20 %. Once salary and interest together cross the UK line, the allowance halves and the interest above it meets the UK higher savings rate of 40 %, which is lower than the 42 % Scottish rate on pay.
The allowance test is British, too
Section 12B, which fixes the Personal Savings Allowance at £1,000, £500 or nil, uses the UK bands for Scottish taxpayers as well (Income Tax Act 2007, section 12B). A Scot is a higher rate taxpayer for this purpose only when income goes past the UK higher rate threshold, and an additional rate taxpayer only above £125,140 of taxable income. The Personal Savings Allowance page shows how interest can tip someone over the line.
2027/28 in Scotland
The UK savings rates for 2027/28 are already law, so the tax on interest for that year can be worked out now for a Scottish saver in exactly the same way as for anyone else; the page on the 2027/28 rates sets out the increase. The Scottish rates on pay for 2027/28 will be set by the Scottish Parliament later and are not known. They only enter the tax caused by interest when income is above £100,000, where interest shrinks the Personal Allowance and the extra tax on pay is priced at Scottish rates; the page on income over £100,000 covers that zone. For that case the tool shows the savings part and marks the rest as not yet known.