The Scottish rate of income tax will come into effect from 6 April 2016 and will affect anyone living in Scotland, and all employers with employees who live in Scotland.
HMRC will contact those living in Scotland, to inform them they have been identified as being a Scottish taxpayer.
What you need to know
- 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.
- Employers must ensure that payroll software is up to date and able to apply the new ‘S’ codes.
- The new ‘S’ tax code will need to be applied to all employees identified as being Scottish taxpayer, even if the rates of Income Tax in Scotland remain the same as the rest of the UK.
- There will be no other change to the way employers report or make payments for income tax to HMRC.
- HMRC will be responsible for identifying whether someone is a Scottish taxpayer using the address information held on our records.
- HMRC will therefore need to be informed of any address changes, to enable them to correctly identify any Scottish taxpayers and ensure they pay the right amount of tax.
- The 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.
For further assistance please contact Sue Stephens, Tax Partner.