HM Revenue and Customs have announced that the Scottish rate of income tax will come into effect from  6 April 2016 and will affect all Scottish tax payers, and all employers with employees who live in Scotland.

HM Revenue and Customs have already started to contact customers living in Scotland, where their records show this as their main address, 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 with employees who live in Scotland should ensure that their payroll software is up to date and able to apply the new ‘S’ codes.
  • Employers should be aware that they will need to apply the new ‘S’ tax code to all employees identified as being a Scottish taxpayer, even though it has been announced that the rate 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 HM Revenue and Customs, other than applying the ‘S’ tax code to Scottish taxpayer employees.
  • HM Revenue and Customs will be responsible for identifying whether someone is a Scottish taxpayer using the address information held on their records.
  • It is important to inform HM Revenue and Customs if your address changes, to enable HM Revenue and Customs to correctly identify any Scottish taxpayers and ensure the right amount of tax is paid.
  • The tax tables are due to be updated on GOV.UK in February 2016 to show the Scottish Rates of Income Tax for basic, additional and higher rate taxpayers.

Updates and all the latest information can be found on the Scottish Rate of Income Tax news page.

If announcement of the Scottish rate of tax affects you and you would like any further information or assistance, please contact your local Saint & Co Office.