What you need to do about the Scottish Rate of Income Tax

In December HMRC began writing to taxpayers who are expected to pay the Scottish Rate of Income Tax (SRIT), to prepare the tax’s introduction on 6th April 2016.

The SRIT will apply to someone who is resident in the UK for tax purposes and whose sole or main place of residence for all or part of the tax year is Scotland. The place of work is irrelevant. Taxpayers liable to pay SRIT will receive their letter from HMRC by the end of February 2016 that will confirm their main residence and if they will be liable to pay SRIT.

HMRC have confirmed that individuals who receive a letter should not take any further action, providing the address details HMRC holds are accurate.

It should be noted that employees (and not employers) are responsible for informing HMRC of any changes to their address, although we advise employers to encourage their employees to notify HMRC of any changes, to ensure that they are given the correct tax code. This can be done easily online at https://www.gov.uk/tell-hmrc-change-of-details.

Please note that HMRC will be responsible for deciding whether a taxpayer should pay the SRIT and will notify employers accordingly.

Each year, the Scottish Parliament will set a single rate that will replace a portion of UK basic, higher and additional income tax rates. On 16th December 2015, John Swinney, Deputy First Minister proposed that the SRIT for the tax year 2016/17 will be 10%.

From 6th April 2016, the tax code of those paying the new rate will be prefixed by an S, for example, a current tax code of 1060L will now read S1060L.

SRIT does not need to be shown separately on payslips or P60s, but will be reflected separately on HMRC’s tax calculations, Digital Accounts and Annual Tax Summaries.

Should you have any queries regarding the Scottish Rate of Income Tax and payroll, please contact our Payroll Manager, Neil Cameron, at payroll@chiene.co.uk.