A couple of weeks ago we looked at the UK’s decidedly un-progressive payroll tax rates. I said “don’t get me started on Scotland”, but hey, as it’s Hogmanay…

The graph below shows the combined employer and employee tax and NIC rates for Scottish residents. If you thought the rates for the rest of the UK were a mess, arguably this takes the biscuit (shortbread?)

Note the peak at £43,430 where the combined tax and NIC hit for the employee, for the next £1 earned, is 53%. Add in employer’s NIC and the UK and Scottish Governments take 66.8p for every 47p the employee takes home.

Above £150k the true marginal rate is “only” 48% regardless of how much more you earn….

One wonders why the Scottish income tax rates are so much more complex? This is a headache not just for Scottish residents, but for payroll managers all across the UK.