As above, taxable income is income in excess of the personal allowance. For 2023/24 the Welsh rate of income tax on non- savings income is set at 10% and this is added to the UK rates, which are each reduced by 10%. For 2023/24, the overall tax payable by Welsh taxpayers continues to be the same as English and Northern Irish taxpayers. Scottish and Welsh taxpayers continue to pay tax on their savings and dividend income using the UK rates and bands and the personal allowance is set for the UK as a whole. Income tax reliefs In order to encourage charitable giving and saving for the future, income tax relief is available for donations made to charity under gift aid and pension contributions to personal pension schemes. Basic rate relief is deemed to be given at source. Effectively what this means is that basic rate tax is reclaimed by the charity or pension fund. So you only need to pay £100 for the charity/fund to receive £125.
The dividend allowance (DA) is available to all taxpayers regardless of their marginal tax rate. The DA charges the first £1,000 of dividends to tax at 0%. Savings and dividends received above these allowances are taxed at the rates shown in the table. Savings and dividends within the SA or DA still count towards an individual’s basic or higher rate band and so may affect the rate of tax payable income in excess of the allowances. In addition, some taxpayers may be entitled to the starting rate for savings which taxes £5,000 of interest income at 0%. However, this rate is not available if non-savings income exceeds £5,000. Tax Tip The DA will reduce to £500 for 2024/25. You may wish to consider accelerating dividends to take advantage of the higher DA for 2023/24. Rates and bands for Scottish and Welsh taxpayers For 2023/24 the tax rates and bands applicable to Scottish taxpayers on non-savings and non-dividend income are as follows: Taxable income £ Band name Rate % 0 - 2,162 Starter 19 2,163 - 13,118 Basic 20 13,119 - 31,092 Intermediate 21 31,093 - 125,140 Higher 42 Over 125,140 Top 47
Relief for higher and additional rate taxpayers is given by extending the bands as set out above by the gross amount of the donation (the total receipt by the charity/fund). For example, a higher rate taxpayer making a donation of £100 would pay tax at 20% on the first £37,825 of taxable income rather than £37,700. Tax Tip Gift aid donations and personal pension contributions are also deducted from your income to arrive at adjusted net income for the purposes of calculating any reduction in your personal allowance. If your adjusted net income is between £100,000 and £125,140, you may want to consider making or increasing charitable donations or pension contributions in order to minimise the reduction in the personal allowance.
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A Few Essentials
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