Pensions in Scotland
Employees in Scotland have been given the opportunity to add to their savings as a result of a quirk created by new tax rates north of the border.
From April, the Scottish income tax system will differ for the first time from the rates and bands used in the rest of Britain.
Two new bands have been created – a starter and an intermediate rate of 19pc and 21pc respectively – while the existing higher and top rates will increase by 1pc in the pound each. The basic rate remains unchanged at 20pc.
The Government offers tax relief on pension contributions. Pension savers are given a top-up based on their marginal rate of income tax, meaning that higher earners get a bigger boost per pound saved. Now that some people will pay tax at 41pc and 46pc they will be able to claim an additional 1 percentage point of tax relief on all their pension savings.
The extra 1 percentage point tax relief can also be claimed by intermediate-band payers and additional-rate payers. People on the starting or basic rate are unaffected.