Scottish Rate of Income Tax SRIT

Published / Last Updated on 11/05/2017

Scottish Income TaxThe Scottish Rate of Income Tax (SRIT) explained  (UK Income Tax National Rates for rest of UK)

The first thing to undertand is normal/national UK rates of income tax:

  • Basic rate income tax 20.00 %
  • Higher rate income tax 40.00 %
  • Additional rate income tax 45.00 %

The new Scottish rate of income tax started on 6 April 2016.

There is a reduction of 10% in the normal rates of national/UK income tax for residents of Scotland.  So, 'national' income tax is reduced but in addition the Scottish Parliament sets an additional Scottish rate of income tax (SRIT) that is paid to Scotland's government via HMRC.

Example: If UK income tax rates were: Basic rate income tax 20%, Higher rate income tax 40% and Additional rate income tax 45%.  In Scotland these are reduced by 10% to Basic rate income tax 100%, Higher rate income tax 30% and Additional rate income tax 35%.

If Scotland then sets SRIT at 12%, the total rates of income tax for residents of Scotland would be:

  • Basic rate income tax 10% + 12% SRIT = 22%
  • Higher rate income tax 30% + 12% SRIT = 42%
  • Additional rate income tax 35% + 12% SRIT = 47%

What are the current Scottish Rates of Income Tax?

Scottish Income Tax Rates For Tax Year 2017  (06/04/2017 to 05/04/2018)

Personal allowances
The amount you can earn/pension income before tax is deducted i.e. no tax to pay.  The current personal allowances are:

  • Born After 05/04/1938 - £11500
  • Born before 06/04/1938 - £11500
  • Additional Blind Person's Allowance - £2320

Note: Personal allowances may be lower if have income in excess of you have underpaid tax in the past or if you have adjustments for taxable benefits in kind such as private medical insurance and a company car.  Personal allowances may even be higher if you claim for things like a uniform cleaning allowance.

Scottish Tax Rates and Tax Bands

Income above the above mentioned 'tax free' personal allowances is charged at the following rates:

Working Out The Tax - How it works - work out taxable income first

  • From Gross/Total Income deduct your personal allowance.  This is your taxable income.

Basic Rate 20.00 % tax on taxable income below £31500

  • If your taxable income is BELOW £31500 then income tax at 20.00 % is payable on all this income above your personal allowance.
  • If your taxable income is ABOVE £31500 then income tax at 20.00 % is payable up to £31500 and the excess taxable income will be taxed at higher rate tax as follows

Higher Rate 40.00 % tax on taxable income in excess of £31500

  • If you have taxable income above £31500 then 40.00 % tax is payable on taxable income between £31501 and £150000
  • For every £2 earned over £100000, your personal allowance is reduced by £1.
  • Meaning earners over £123,000 have no personal allowance.

Additional Rate 45.00 % tax on taxable income above £150000.

  • For every £2 earned over £100000, personal allowance is reduced by £1.
  • Meaning earners over £123,000 have no personal allowance.
  • 0-£31500 taxed at 20.00 %, £31501 - £150000 taxed at 40.00 %, £150000 + taxed at 45.00 %

How will I be paid?

Your payroll will run as normal and your employer will pay income taxes to HMRC.

Your tax returns will be completed as normal and administered by HMRC.

How will they know I am a Scottish Taxpayer?

  • HMRC will apply address checks. 
  • Your employer will apply address checks.  
  • You should notify HMRC that you are resident in Scotland if you move there.

"S" on National Insurance Number

Your national insurance number currently reads two letters then 6 numbers then a letter e.g. "XX 12 34 56 X"

The last letter in your national insurance number will be changed to the letter "S" to designate that you are Scotland resident.

What about tax relief on Pensions?

Currently, tax relief on pension contributions works in the same way, but we are awaiting potemtial changes to tax relief overall (these were postponed by former Chancellor George Osborne following the Brexit vote).

 

 


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