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HMRC Publishes Brief On Scottish Rate Of Income Tax

by Robert Lee, Tax-News.com, London

17 September 2015


UK tax authority HM Revenue and Customs (HMRC) has published an e-brief on the Scottish Rate of Income Tax (SRIT), which is due to enter into effect from April 2016.

From April 1, 2016 the Scottish Parliament will have responsibility for a SRIT. Parliament will be able to set the thresholds and rates of income tax in Scotland. It is expected that the Scottish Finance Minister will announce the thresholds and rates as part of the Budget later this year.

HMRC explained that, depending on the level the Scottish Parliament sets the rate at, Scottish taxpayers may pay a different rate of income tax to the rest of the UK. The SRIT will not apply to income from savings such as building society interest or income from dividends. This rate will stay the same for all taxpayers across the UK.

An individual will pay the SRIT if they are resident in the UK for tax purposes and their main residence for most of the tax year has a Scottish postcode. HMRC will collect the SRIT on behalf of the Scottish Government. The Department said it will contact potential Scottish taxpayers before April 2016.

If an individual is eligible to pay the SRIT, their April 2016 tax code will begin with the letter 'S'. Where an individual pays income tax through their wages (Pay As You Earn), HMRC will advise their employer to treat them as a Scottish taxpayer. There will be no change to how employers report or make payments for income tax to HMRC other than to apply the SRIT code to their Scottish taxpayer employees.

HMRC said it will also provide information to registered pension scheme administrators and pension providers to allow them to identify their Scottish taxpayer members. The UK Government has agreed that registered pension scheme administrators and pension providers have until April 2018 to put in place the necessary changes to their IT systems that will allow them to claim Relief at Source (RAS) at the correct rate. Until then, all RAS claims will be made at the UK basic rate.

TAGS: tax | interest | revenue guidance | employees | United Kingdom | tax authority | tax rates | HM Revenue and Customs (HMRC) | dividends | tax reform | HM Revenue and Customs (HMRC) | individual income tax | Scotland

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