Tax in Scotland

News: June 2012

Tax in Scotland

If you live in Scotland, you probably know that the Scottish Parliament now has the power to set a Scottish rate of income tax to be administered by HMRC for Scottish taxpayers. It is expected to apply from April 2016, so there is plenty of time to get ready for this extra layer of administrative burden. Whether it will involve extra tax as well remains to be seen.

Please be assured that we will remain up-to-date on developments involving tax in Scotland and will be advising those affected in plenty of time.

For employees and pensioners, the income tax change will be applied through PAYE. HMRC will issue tax codes to employers in the months before April 2016, which will identify those employees who are Scottish taxpayers. Employers will deduct tax at the appropriate rates, which may be higher, lower or the same as those which apply in the rest of the UK.

The definition of a Scottish taxpayer is based on the location of an individual’s main place of residence, with the promise of further guidance being available in due course.