How Scottish income tax will affect pension tax relief

After that, HMRC will continue to "explore the most appropriate way" to cater for the new income tax rates and bands, it wrote.

Ms Vahey said: "It is good HMRC have reacted so quickly to the confirmation of the new Scottish income tax rates, and its speedy response will help advisers and providers whose clients are resident in Scotland understand the implications for relief at source.

"Continuing to add 20 per cent tax relief to everyone's pension contributions is definitely the simplest approach. However, it may have been a simpler approach for intermediate taxpayers if HMRC could instead make an automatic adjustment."

Scottish income tax – the new bands for 2018/19


Band name

Rates (%)

Over £11,850-£13,850

Starter Rate


Over £13,850-£24,000

Basic Rate


Over £24,000-£43,430

Intermediate Rate


Over £43,430-£150,000

Higher Rate


Above £150,000

Top Rate