Scottish Rate of Income Tax

The Scottish rate of income tax will come into effect from 6 April 2016 and will affect all taxpayers living in Scotland, and all employers with employees who live in Scotland.

HMRC will contact customers living in Scotland, where our records show this as their main address, to inform them they have been identified as being a Scottish taxpayer.

• Scottish taxpayers will have a tax code prefixed by an ‘S’. Scottish tax codes will be issued as part of the annual coding routines to employers, so the correct rate of income tax can be deducted based on each individual’s taxpayer status.
• Where taxpayers live in Scotland, their employers must ensure that their payroll software is up to date and able to apply the new ‘S’ codes.
• Employers will need to apply the new ‘S’ tax code to all employees identified as being a Scottish taxpayer, even if the rates of Income Tax in Scotland remain the same as the rest of the UK.
• There will be no change to the way employers report or make payments for income tax to HMRC, other than applying the ‘S’ tax code to Scottish taxpayer employees.
• HMRC will be responsible for identifying whether someone is a Scottish taxpayer using the address information held on our records.
• Taxpayers should tell HMRC if their address changes, to enable them to correctly identify Scottish taxpayers and ensure they pay the right amount of tax.
• The tax tables will be updated on GOV.UK in February 2016 to show the Scottish Rates of Income Tax for basic, additional and higher rate taxpayers.