Employees In Wales Incorrectly Pay Scottish Tax Rates
Employees In Wales Incorrectly Pay Scottish Tax Rates

PERSONAL TAX

Devolution of tax powers were extended to Wales from April 2019. There should be no material difference to taxpayers at the moment as the Welsh Assembly has continued to set rates to match the rest of the UK.

Scotland, where devolution of tax powers occurred a few years ago (2016), initially followed the same pattern of no change to the rest of the UK. It then made a slight change to affect higher rate taxpayers, in 2017, but from 2018 made drastic changes to introduce a 5 band tax system with different rates from other UK taxpayers.

When it comes to payroll, Scottish tax is calculated based on the taxpayer's tax code, which would be prefixed with an 'S'.

In Wales, HMRC is differentiating the tax system by prefixing Welsh taxpayer codes with a 'C'.

The blunder however has been caused by some employers in Wales using the 'S' prefix for Welsh taxpayers. It is unknown how many people are affected but in general the affect of Scottish taxation would be to tax those at the lower scale less, and those at the higher rate scale more, than would be normally taken.

Basic rates in Scotland are a percentage point below UK, at 19%, whereas above that there is a middle rate which is 1% higher than the UK rate, at 21%. It is complicated, but you can use our calculators and see the difference in pay by clicking the flags to switch between tax systems for the different countries.

Thanks to dynamic tax coding, HMRC has stated that any adjustments required to correct underpaid or overpaid tax will be automatically rectified in future payslips.

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