SD2 Tax Code in Scotland Explained (2026-27)
SD2 is a Scottish flat-rate code: all income from this job or pension is taxed at Scotland's advanced rate of 45%, with no Personal Allowance. The advanced rate band covers income from £75,001 to £125,140 in 2026-27. SD2 is issued when your other income already reaches that band, so every pound from this source is taxed at 45%.
What does tax code SD2 mean?
Tax code SD2 taxes all income from this source at 45%, Scotland's advanced rate, with no Personal Allowance. HMRC applies it when your other income already reaches the advanced band (£75,001 to £125,140 in 2026-27).
Who gets tax code SD2?
Scottish residents with high combined income, where the main source already exceeds £75,000. Directors with a salary plus a separate pension, or senior employees with a second paid role, are the usual cases. Because the Personal Allowance tapers away between £100,000 and £125,140, HMRC watches these codes closely; check your Personal Tax Account if your main income changes during the year.
Scottish Income Tax: Scotland sets its own income tax rates via the Scottish Parliament. For 2026-27, the Starter Rate (19%) applies from £12,571-£14,876, the Intermediate Rate (21%) applies from £26,562-£43,662, and the Higher Rate (42%) applies from £43,663-£75,000, significantly higher than England's 40% which starts at £50,270. National Insurance is the same across all UK regions.
Take-home pay on tax code SD2, Scotland 2026-27 examples
Examples below show Scottish Income Tax and take-home pay at common salary levels. NI applies on the same basis for all UK employees regardless of region.
| Gross Salary | Scottish IT | NI (est.) | Take-Home | Effective IT Rate |
|---|---|---|---|---|
| £20,000 | £9,000 | £594 | £10,406 | 45.0% |
| £25,000 | £11,250 | £994 | £12,756 | 45.0% |
| £30,000 | £13,500 | £1,394 | £15,106 | 45.0% |
| £35,000 | £15,750 | £1,794 | £17,456 | 45.0% |
| £40,000 | £18,000 | £2,194 | £19,806 | 45.0% |
| £45,000 | £20,250 | £2,594 | £22,156 | 45.0% |
| £50,000 | £22,500 | £2,994 | £24,506 | 45.0% |
| £60,000 | £27,000 | £3,211 | £29,789 | 45.0% |
| £75,000 | £33,750 | £3,511 | £37,739 | 45.0% |
| £100,000 | £45,000 | £4,011 | £50,989 | 45.0% |
Take-home = Gross − Scottish Income Tax − National Insurance. No pension, student loan or other deductions. NI: 8% between £12,570-£50,270 and 2% above.
Scottish income tax bands 2026-27
| Band | Rate | Income range |
|---|---|---|
| Starter Rate | 19% | £12,571-£16,537 |
| Basic Rate | 20% | £16,538-£29,526 |
| Intermediate Rate | 21% | £29,527-£43,662 |
| Higher Rate | 42% | £43,663-£75,000 |
| Advanced Rate | 45% | £75,001-£125,140 |
| Top Rate | 48% | £125,141-no upper limit |
Tax code SD2 vs S1257L: take-home comparison
How much more or less you take home on SD2 compared to the standard S1257L code at the same gross salary. A negative number means less take-home pay.
| Gross Salary | S1257L Take-Home | SD2 Take-Home | Difference |
|---|---|---|---|
| £20,000 | £17,948 | £10,406 | -£7,542 |
| £25,000 | £21,548 | £12,756 | -£8,792 |
| £30,000 | £25,123 | £15,106 | -£10,017 |
| £35,000 | £28,673 | £17,456 | -£11,217 |
| £40,000 | £32,223 | £19,806 | -£12,417 |
| £45,000 | £35,492 | £22,156 | -£13,336 |
| £50,000 | £37,992 | £24,506 | -£13,486 |
| £60,000 | £43,575 | £29,789 | -£13,786 |
| £75,000 | £51,975 | £37,739 | -£14,236 |
| £100,000 | £65,225 | £50,989 | -£14,236 |
Both columns include Scottish Income Tax and National Insurance. No pension or student loan deductions. S1257L = standard Scottish Personal Allowance of £12,570.
If you have tax code SD2, here's what you should know
- Your S-prefix tax code confirms you are coded as a Scottish resident for income tax purposes. HMRC uses your residential address to determine this.
- Your employer uses this code to deduct Scottish Income Tax, they follow HMRC's instructions and cannot change your code themselves.
- If you have recently moved to or from Scotland, contact HMRC to ensure your code is updated. An incorrect residence determination means wrong tax rates applied.
- You can view and update your tax code via your Personal Tax Account at gov.uk.
- If you think your code is wrong, contact HMRC on 0300 200 3300 or use the HMRC app.
Frequently asked questions
What does tax code SD2 mean?
SD2 is a Scottish flat-rate code: all income from this job or pension is taxed at Scotland's advanced rate of 45%, with no Personal Allowance. The advanced rate band covers income from £75,001 to £125,140 in 2026-27. SD2 is issued when your other income already reaches that band, so every pound from this source is taxed at 45%.
Who gets tax code SD2?
Scottish residents with high combined income, where the main source already exceeds £75,000. Directors with a salary plus a separate pension, or senior employees with a second paid role, are the usual cases. Because the Personal Allowance tapers away between £100,000 and £125,140, HMRC watches these codes closely; check your Personal Tax Account if your main income changes during the year.
How much do I take home on tax code SD2 earning £30,000 in Scotland?
On tax code SD2 with a £30,000 salary in Scotland, you take home £15,106 per year (£1,259 per month) after Scottish Income Tax of £13,500.
Is tax code SD2 correct for me?
Your Scottish tax code is set by HMRC based on your individual circumstances and Scottish residence. If you believe your code is wrong, contact HMRC on 0300 200 3300 or check your Personal Tax Account at gov.uk. An incorrect code could mean you are paying too much or too little Scottish Income Tax.
Want to see your exact Scottish take-home pay with your real salary, pension, and student loan?
Use the Scotland salary calculator →