Scottish rate of income – what you need to know

By Michael McGlinchey, CA Today

30 November 2015

Tax chiefs are stepping up awareness-raising about the new Scottish Rate of Income Tax for taxpayers and agents.

HMRC is issuing new advice to taxpayers and agents ahead of the introduction of the Scottish Rate of Income Tax (SRIT) on 6 April, 2016.

The Scottish Government will announce the SRIT on 16 December, 2015 in the Scottish Budget. This week, Scottish residents will begin receiving letters advising them of the change and assuring taxpayers that they do not need to take any further action if their address details are correct. Action need only be taken if the taxpayer disputes their residency status.

The letters will refer any queries to the GOV.UK website and there will be no dedicated telephone contact point.

HMRC has also set out a number of points agents need to know when advising clients:

  • Scottish taxpayers will have a tax code prefixed by an 'S'. Scottish tax codes will be issued as part of the annual coding routines to employers, so the correct rate of income tax can be deducted based on each individual’s taxpayer status.
  • If any of your clients live in Scotland, their employers must ensure that their payroll software is up to date and able to apply the new 'S' codes.
  • If you represent any employers, you should be aware that they will need to apply the new ‘S’ tax code to all employees identified as being a Scottish taxpayer,even if the rates of income tax in Scotland remain the same as the rest of the UK.
  • There will be no change to the way employers report or make payments for income tax to HMRC, other than applying the ‘S’ tax code to Scottish taxpayer employees.
  • HMRC will be responsible for identifying whether someone is a Scottish taxpayer using the address information held on its records.
  • HMRC has asked agents to encourage clients to tell HMRC if their address changes, to enable them to correctly identify any Scottish taxpayers and ensure they pay the right amount of tax.

Officials said tax tables will be updated on GOV.UK in February 2016 to show the Scottish Rates of Income Tax for basic, additional and higher rate taxpayers.


  • Tax

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