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Scottish rate of Income Tax

Mar 14, 2016

The Scottish rate of Income Tax will come into effect from 6 April, 2016. 

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; 

  • If any of your employees live in Scotland you will be sent the ‘S’ tax code in the annual coding run; 

  • You must ensure that your payroll software is up to date and able to apply the new ‘S’ codes; 
  • You will need to apply the new ‘S’ tax code to all employees identified as being a Scottish taxpayer, even if the rates of Income Tax in Scotland remain the same as the rest of the UK; 
  • There will be no change to the way you report or make payments for income tax to HMRC, other than applying the ‘S’ tax code to Scottish taxpayer employees; 

  • You do not need to take any action to identify whether any of your employees are Scottish taxpayers, as this will be done by HMRC using the address information held on their records; 

  • Please encourage your employees to tell HMRC if their address changes to enable it to correctly identify any Scottish taxpayers and ensure they pay the right amount of tax; 

  • The tax tables were updated on in February 2016 to show the Scottish rates of Income Tax for basic, additional and higher rate taxpayers.  

On 2 December, 2015 HMRC began to contact people living in Scotland where its records showed this is their main address, to inform them they have been identified as being a Scottish taxpayer.  

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