Income Tax in Scotland

Our experts tell you everything you need to know about Income Tax if you live in Scotland

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust. Or you can check out our online calculator to see if you could be due a refund.

Is Income Tax different in Scotland?

There are some differences to the way you pay Income Tax if you live and work in Scotland. Firstly, it is called Scottish Income Tax and it is paid to the Scottish Government. For the tax year 6th April 2016 to 5th April 2017, this was a different tax called ‘the Scottish rate of Income Tax’.

Just like Income Tax for the rest of the UK, you pay Scottish Income Tax on your wages, pension and most other taxable income. If you have tax to pay on dividends from shares and savings interest, you will pay the same tax as the rest of the UK.

What are the rates for Scottish Income Tax?

Just like the rest of the UK, if you live in Scotland you will have a personal tax-free allowance, which is currently £11,500 although if you pay tax at the additional rate, you don’t get a tax-free personal allowance.

The current rates of Scottish Income Tax are as follows:

Band Taxable Income Scottish Income Tax rate
Personal Allowance Up to £11,500 0%
Basic Rate £11,501 to £43,000 20%
Higher Rate £43,001 to £150,000 40%
Additional Rate Over £150,000 45%

 

Who has to pay Scottish Income Tax?

If you live in Scotland, you have to pay Scottish Income Tax. You may also be expected to pay Scottish Income Tax if you move to (or from) Scotland, live in a home in Scotland as well as one elsewhere in the UK for work purposes or don’t have a home but stay in Scotland regularly, for example, if you stay offshore or in hotels.

How do you pay Scottish Income Tax?

If you are liable to pay Scottish Income Tax, your tax code will begin with an ‘S’ – this tells your employer or pension provider that your income (wages or pension) should be taxed at the Scottish rate. So, for example, if you pay Scottish Income Tax and have the standard personal tax-free allowance, your tax code will be S1150L.

If you need to fill in and send a Self Assessment tax return, there is a box on the online form for you to tick to inform HMRC that you pay Scottish Income Tax.

What happens if you move to or from Scotland?

If you move to Scotland and live there for at least half a tax year you will have to pay Scottish Income Tax. Similarly, if you move from Scotland but have lived there for at least half a tax year you will be liable for Scottish Income Tax. You need to inform HMRC of your new address as soon as possible to make sure you’re not paying the wrong rate of tax.

The new rate of tax will be backdated to the start of the tax year in which you moved. This means that the tax which is deducted from your pension or wages will be adjusted automatically so you pay the right amount across the whole tax year.

What if you live in more than one home?

If you live in more than one home, and one of those homes is in Scotland, you need to know which one is designated to be your main home.

Your main home is usually designated to be the one you spend most of your time in. It makes no difference as far as HMRC is concerned, whether that home is rented, owned or whether you are allowed to live in the home for free – that has no bearingon determining which is your main home.

Of course, it may be that the home you consider to be your main home is the one you spend least time in, but it will still be considered to be your main home if the following apply:

  • It’s where you are registered for things, such as with a GP surgery or where your bank or insurers consider you to live
  • Most of your possessions are there
  • You are a member of clubs or societies in that area
  • Your family lives there, if you are married or in a civil partnership.

So, if you work away from home for example, this might be the situation you find yourself in.

If you want to change which home is designated to be your main home, you need to contact HMRC to inform them. You can call them on 0300 200 3300 (textphone 0300 200 3319).

What if you’re not sure which is your main home?

If you really can’t tell which is supposed to be your main home, HMRC have a detailed information guide to help you decide. This includes help to determine your main home if you are a student, you don’t have a permanent home or if you are a mobile worker who has to travel a lot for your job.

What about rates for the 2016/17 tax year?

Scottish Income Tax was introduced from 6th April 2017 and from this date, Income Tax paid in Scotland was paid to the Scottish Government. For the preceding tax year, from 6th April 2016 to 5th April 2017, there was a ‘Scottish rate of Income Tax’, which was the same rate of Income Tax as the rest of the UK but 10% was paid to the Scottish Government.

In the same way as Income Tax and Scottish Income Tax, the Scottish rate of Income Tax was payable on wages, pensions and most other forms of taxable income. But like the current situation, share dividends and savings interest was taxed at the same rate as the rest of the UK.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax rebate. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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