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  • Scottish Income Tax Rate

Scottish Income TaxThe Scottish Rate of Income Tax (SRIT) explained

The basics to Scottish rate income tax:

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

  • Basic rate income tax 20%
  • Higher rate income tax 40%
  • Additional rate income tax 45%

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

There will be 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 will set an additional Scottish rate of income tax (SRIT) that is paid to Scotland's government via HMRC.  Therefore, In Scotland, residents will pay:

  • Basic rate income tax 10% + SRIT%
  • Higher rate income tax 30% + SRIT%
  • Additional rate income tax 35% + SRIT%

As an example if Scotland sets SRIT at 12%, the total rates of income tax for residents of Scotland will 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%

When will SRIT % be confirmed? 

  • February 2016

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?

We are not sure yet but it is no secret that the Government are planning changes to pension tax relief in the March Budget 2016.  We guess there will be a move to either withdraw tax relief totally, but then pay pension income when you take it without tax dedcuted or a lower flat rate income tax relief for all introduced.



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