Scottish Rate of Income Tax (SRIT)

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This page features key information on the Scottish Rate of Income Tax (SRIT) which was introduced from 6 April, 2016.


The Scottish Rate of Income Tax (SRIT) was introduced on 6 April 2016 under the provisions of the Scotland Act 2012. The requirement to set a Scottish rate of income tax is an annual requirement but the effect is on a UK tax and the SRIT is administered by HMRC.

The SRIT applies to non-savings income of individuals who are Scottish taxpayers, in other words and in general terms to earned income, pensions, self-employed income and property income.

Who pays the Scottish Rate of Income Tax?

A Scottish taxpayer is an individual who is a UK resident and has a close connection to Scotland.

General information about who will pay SRIT is provided by HMRC.

More detailed technical information about who is a Scottish taxpayer is available on the GOV.UK website.

HMRC undertook an exercise before the introduction of SRIT to issue information letters to those it considers to be ‘Scottish’ taxpayers and advise them of this based on details held by HMRC, and to assure taxpayers that they do not need to take any further action if their address details are correct. Scottish taxpayers have an 'S' prefix in their tax code. ICAS is aware that HMRC is still contacting taxpayers to advise them that they are Scottish taxpayers during June 2016.

SRIT applies to individuals only so there are no special rules for partnerships or trusts. Partners who are Scottish taxpayers pay SRIT on their income. Trustees and Personal Representatives continue to be subject to UK income tax and are not liable to pay tax at the SRIT rate. Beneficiaries in receipt of income from an estate continue to pay UK tax. The position of Scottish taxpayers who receive, or are taxable on, non-savings income arising in or from a trust is dependent on the nature of their entitlement and the tax residence of the trust.

Further information on this can be found in the HMRC technical note clarifying the scope of SRIT [May 2012] and subsequent guidance.

What is the role of employers?

All employers – and this can be any employer across the UK - of ‘Scottish taxpayers’ are required to deduct the Scottish Rate of Income Tax as part of their PAYE processes. HMRC has notified employers through the ‘S’ coding for PAYE of those employees affected by SRIT.

However, ICAS is aware that as at mid-June 2016 HMRC has not yet correctly identified or informed all employees who are Scottish taxpayers of their ‘S’ code status. Employers have been asked to encourage their employees who think they have an incorrect tax code to get in touch with HMRC, but employers do not have a legal duty to do this, or to adjust any code to ‘S’ – see here. Key points for employers are:

  • There is 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 is responsible for identifying whether someone is a Scottish taxpayer.
  • Scottish taxpayers have a tax code prefixed by an 'S'. Scottish tax codes have been 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.

Information about employer duties in relation to SRIT collection was included in the April 2016 edition of the Employer Bulletin issued by HMRC - Download PDF.

Tax tables are included on the GOV.UK website and cover the Scottish rates of income tax for basic, additional and higher rate taxpayers.

How much is the Scottish Rate of Income Tax?

SRIT applies by reducing the rate of income tax applying on non-savings income by 10% across basic rate, higher rate and additional rate, and adding the Scottish rate applicable for the year. The Scottish Parliament has the power to increase or decrease the rates of tax by one amount only which applies  across the three rate bands – basic rate, higher rate and additional rate.  This needs to be done before the fiscal year commences.  It also applies for the full fiscal year.

The Scottish Government announced that the rate of the SRIT for 2016/17 is 10 percent on 16 December,2015 in the Scottish Budget and there is more information about this at Further information on the Scottish Government’s Budget is available on the Scottish Parliament website.

What is the future of SRIT?

The Scotland Act 2016 gives the Scottish Parliament further powers in relation to Scottish income tax and will allow it to vary rates and bands. The powers under Scotland Act 2012 for the SRIT provide for the power to increase or decrease rates by one amount across all the rates. The revised powers allow rates of income tax to be varied independently along with powers to set the rate bands and will be effective from 6 April, 2017.

How much might an individual’s Scottish tax bill be?

A SRIT calculator is available on the Scottish Parliament website.

SRIT and other areas of the tax system

HMRC technical note clarifying the scope of SRIT [May 2012] - This sets out the policy intentions in areas where the rate setting power intersects with other areas of the income tax system, such as with partnerships, with charitable donations and for pensions contributions.

It should be read in conjunction with Clarifying the scope of the SRIT [December 2014] which sets out consequential amendments to legislation (contained mainly in FA 2014, Schedule 38).

UK income tax rates continue to apply in the following instances:

  • Foreign entertainers and sportsmen/women
  • Non-resident landlord scheme
  • Construction Industry Scheme on tax deducted at source only (Scottish taxpayers will pay SRIT via their self-assessment tax returns in the normal way)

Care needs to be taken with the legislation as it is contained in a number of different acts. The main act in relation to SRIT is Part 3 of the Scotland Act 2012, which inserts new provisions into the Income Tax Act 2007 and the Scotland Act 1998.

This information was prepared in June 2016.


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