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The Scottish Rate of Income Tax

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The Scottish Rate of Income Tax


The Scottish rate of Income Tax was introduced in the Scotland Act 2012 and will start on 6th April 2016.


The Scottish Government has proposed that the Scottish rate will be 10% for the tax year 2016 to 2017.

What rate will Scottish taxpayers pay?

There is no overall change to the Income Tax rate you already pay – whether you pay the basic, higher or additional rates.

However, UK Income Tax rates will be reduced by 10 percentage points for people living in Scotland. You’ll then pay the Scottish rate of 10% on top of your UK rate. For example, if you pay tax at the basic rate of 20% this will reduced to 10%. You’ll then pay the Scottish rate of 10% on top of this, giving a total of 20%.

Some of the Income Tax collected under the Scottish rate will fund the Scottish government, and the rest will fund the UK government.

The Scottish rate of Income Tax doesn’t apply to income from savings such as building society interest or income from dividends. This rate will stay the same for all taxpayers across the UK.

HM Revenue and Customs (HMRC) will collect the Scottish rate of Income Tax on behalf of the Scottish government.

National Insurance contributions are unaffected by the introduction of the Scottish rate of Income Tax.


Are you a Scottish Tax  taxpayer?

It’s where you live, not where you work, that decides whether you’re a Scottish taxpayer.

If you live in one place during a tax year, and it’s in Scotland, you’ll be a Scottish taxpayer. If you live anywhere else you won’t be.

If you move to or from Scotland, have more than one home, or don’t have a home, you’ll need to work out if you are a Scottish tax payer.

Essentially if you hold more than one home, your main residence is where most of your personal possessions are held or where your family lives.


If you move to or from Scotland in the course of a tax year you’ll be a Scottish taxpayer if you live in Scotland for at least as much of the tax year as you live in any other country in the UK.

However, if there is nowhere during a tax year that you’ve stayed for regular periods that you would regard as your home or if you have more than one place that you live and it’s not possible to identify which is your main home, then you would need to count the number of days you were living in the UK or Scotland to determine if you were a Scottish tax payer or not.

Further details are available in the following link work out if you’re a Scottish taxpayer.


You can only be a Scottish taxpayer if you’re resident in the UK for tax purposes.

If the address HMRC holds for you is in Scotland, you’ll be sent a letter to check your address is correct. These letters started to go out on 2 December 2015.

You’ll be classed as a Scottish taxpayer if the address HMRC holds for you is in Scotland. If you have changed your address, you need to make sure HMRC are aware of this-you can do this or we can do this on your behalf if we have authority from you to do so.

Your April 2016 tax code will begin with the letter ‘S’ to show you’re a Scottish taxpayer.

If you fill in a Self- Assessment tax return you’ll declare if you’re a Scottish taxpayer on the return.
 

Changes to payroll documentation

There is no requirement to  change how you report or make payments for Income Tax to HMRC.


Forms P6 and P9  Tax code notices issued by HMRC will be amended to show the correct tax code for UK and Scottish taxpayers.

In your Brookson Limited company we will ensure that the correct “S” code is applied on your payslips- there is no requirement, however, to show the separate Scottish and UK Income tax rates on the payslips themselves.

If you believe you are a Scottish taxpayer and you do not receive an amended Scottish tax code through the post before 6 April 2016, we would advise that you contact HM Revenue & Customs (the UK tax authorities) to discuss this.

Your employer is unable to amend/change your PAYE tax code without receiving notification and approval from HMRC first.

HMRC contact details: Telephone: 0300 200 3300

Should the Scottish Government change the SRIT in the future, the impact could result in different tax rates throughout the UK. However, we understand there would be no revision to the current SRIT being set at 10% before April 2017.

Should the Scottish Government change the SRIT in the future, the impact could result in different tax rates throughout the UK. However, we understand there would be no revision to the current SRIT being set at 10% before April 2017.