Scottish Rate of Income Tax : Key Points for Taxpayers

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February 26th 2020
Tax Week 47
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Scottish Rate of Income Tax : Key Points for Taxpayers

Important notes for taxpayers subject to the new Scottish Rates starting April 2016.

From April 2016 the income tax rate for people deemed to be residing in Scotland during a tax year will differ from the UK tax rate.

The differences go as far as Income Tax only and at present rates for dividends, savings etc will be unchanged from UK rates. In addition, National Insurance calculations are unchanged and the personal allowances for Scottish taxpayers will also be the same as UK taxpayers.

You are deemed to be liable to the Scottish Rate of Income Tax, if:

  • You live in Scotland during the tax year for at least as long as in any other part of the UK.
  • You have more than one home, one home is Scotland and that is your main home. Your possessions are kept there, your accounts are registered there etc. So, even if you live away in another part of the UK but that is your main home - you are subject to the Scottish rates.
  • You do not have/own a home but 'stay' in Scotland - e.g. hotels or for offshore work. If you stay in Scotland for more time during the tax year than outside of Scotland, then you pay Scottish rates.

The Scottish rates of tax use the same income tax bands as the UK and apply (after personal allowances are taken away) as follows:

  • £0 - £32,000 = 10 percent UK + 10 percent Scottish = 20 percent Total rate
  • £32,001 - £150,000 = 30 percent UK + 10 percent Scottish = 40 percent Total rate
  • Over £150,000 = 35 percent UK + 10 percent Scottish = 45 percent Total rate

As can be seen above, the actual rate paid/collected from your income is the same as pre-Scottish rates. The difference is in how the funds are allocated after collection. HMRC will forward the 10 percent from each band as applicable to the Scottish Government on your behalf and retain the difference.

Tax codes for Scottish taxpayers will be prefixed with an 'S' - so for 2016/17 the standard tax code for the majority of people will be 'S1100L' and be equivalent to a personal allowance of £11,000 and inform employers and pension providers to deduct taxes at Scottish rates. For taxpayers filling in a Tax Return there will be a box to tick to declare yourself as a Scottish taxpayer.

Our website and app will be updated before April 6th 2016 to reflect the use of the Scottish tax codes but as noted above, for the upcoming tax year at least, there will be no change to the amount of tax deducted overall in calculations.

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