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If you are a Scottish resident, from 6 April 2016 you pay the Scottish rate of income tax and your tax code should start with the letter “S”.

Introduction

If you live in Scotland, from 6 April 2016, your Pay As You Earn (PAYE) tax code(s) should start with the letter “S”. This is because Scottish residents now pay the Scottish rate of income tax. Your payslips should show your tax code. When you receive your payslips for pay periods after 5 April 2016, check that the tax code is correct!

HMRC and tax codes

If you have employment or pension income (other than the state pension), you should have a PAYE tax code. HM Revenue & Customs (HMRC) use PAYE tax codes to tell employers and pension payers how much income tax to deduct from employment and pension income.

You might have received a PAYE coding notice (form P2) in February or March this year showing your tax code for 2016/17. Do not worry if you did not receive a coding notice, as the addition of the “S” prefix to a tax code is not a trigger for HMRC to issue a PAYE coding notice. So you might not be able to check your tax code until you receive your first payslip for the tax year 2016/17.

It is a good idea to check your payslip each pay date in any case, but if you live in Scotland, it is particularly important to look at the tax code information on your payslip.

Am I a Scottish taxpayer?

You are generally a Scottish taxpayer if you live in Scotland. You can use LITRG's guidance in the ‘tax basics section’ to work out if you are a Scottish taxpayer (the link appears below).

If you have a PAYE code, and you are a Scottish taxpayer, from 2016/17 onwards, your code should have the prefix “S” – it is an “S” code: for example, a typical tax code would be S1100L.

Where can I find my PAYE tax code?

You can find your PAYE code on a PAYE coding notice, your form P60 and your payslips.

What should I do if my PAYE tax code is wrong?

If you check your PAYE tax code for 2016/17 and you think it is wrong, you should contact HMRC.

If you think you are a Scottish taxpayer, but your tax code does not contain the “S” prefix, you should make sure that HMRC have your correct address – this will help to ensure the question of Scottish taxpayer status is dealt with correctly and also means that you receive important information from HMRC. Also let HMRC know your new address if you move house.

It is up to HMRC to correct your tax code – your employer or pension payer is not allowed to change your tax code without an instruction from HMRC.

HMRC have the right address for me, but I still do not have an “S” code. Why is this?

LITRG is unable to give a definitive answer as to why HMRC might not have issued an “S” code in a particular case. That is why it is important that you contact HMRC to discuss your position.

However, anecdotally LITRG understands that when HMRC analysed address data to decide who is a Scottish taxpayer, they might only have considered taxpayers with the country part of their address given as the UK or Scotland. They might not have considered those with the country part of their address given as GB. LITRG therefore suggests that when providing address details to HMRC, you give UK or Scotland as the country, rather than GB.

I am a self assessment taxpayer. Do I have to do anything?

If you do not have any income that is taxed through PAYE (employment or pension income) and you pay your tax through the self assessment system, you will tell HMRC whether or not you are a Scottish taxpayer in your 2016/17 tax return – there will be a box to tick in the return.

You should make sure that HMRC have the correct and up-to-date address for you – this will ensure you receive important information from HMRC. Also let HMRC know your new address if you move house.

Useful links

LITRG tax guide on the Scottish rate of income tax
Contacting HMRC