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Where Taxpayers and Advisers Meet
Scottish income tax rates and thresholds confirmed – what do the changes mean for Scottish taxpayers?
27/02/2017, by Low Incomes Tax Reform Group, Tax Articles - Income Tax
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The Scottish Parliament has confirmed the rates and thresholds for income tax that will apply to the non-savings and non-dividend income of Scottish taxpayers from 6 April 2017.

Background: Scottish rate of income tax (SRIT)

During the current tax year (2016/17), people who live in Scotland pay the SRIT. This only applies to non-savings and non-dividend income. Because of the way the SRIT works, and because the rate was set at 10%, the tax rates for Scottish taxpayers are the same as those for taxpayers elsewhere in the UK.

What the SRIT is, how it works and who has to pay it is explained in the ‘tax basics’ section of the LITRG website.

Tax year 2017/18

The Scottish rates and bands for income tax from 6 April 2017 are set out below:

Scottish income tax rates 2017/18 Scottish income tax bands 2017/18
Scottish basic rate – 20% £11,501 - £43,000 (£31,500)
Scottish higher rate – 40% £43,001 - £150,000
Scottish additional rate – 45% £150,001 and above

   
What these rates and bands cover

In general terms, if your home is in Scotland for more than half of a tax year, you are a Scottish taxpayer (see Useful Links below for more detail). As these rates and bands apply only to the non-savings and non-dividend income of Scottish taxpayers, they will affect people who live in Scotland, if they have earned income, such as employment income, pension income, profits from self-employment, or profits from rental property.

Savings and dividend income

Scottish taxpayers will continue to pay income tax according to the UK rates and bands of income tax on their savings and dividend income.

The basic rate, higher rate and additional rate of tax will all be the same as those that apply in the rest of the UK: 20%, 40% and 45%.

Divergence between treatment in Scotland and the rest of the UK: the higher rate threshold

The only difference from the rates and bands that will apply to taxpayers in the rest of the UK is the higher rate threshold – the point at which individuals start to pay higher rate tax. If we assume that you are eligible for the personal allowance (£11,500 in 2017/18) and have only earned income, if you are a Scottish taxpayer, your higher rate threshold will be £43,000 for 2017/18, whereas if you are a UK taxpayer, your higher rate threshold will be £45,000.

Although there is only one point of divergence between the Scottish and UK rates and bands, this may create a few complexities for Scottish taxpayers. For example, Scottish taxpayers who have savings and dividend income as well as earned income will have to consider both the Scottish and the UK rates and bands when working out their tax liability. These complexities are explored in a blog on the Chartered Institute of Taxation website.

HMRC continue to collect and administer all income tax

Although the Scottish Parliament has set rates and thresholds for income tax payable by Scottish taxpayers on certain types of income, HM Revenue & Customs (HMRC) continue to collect and administer all income tax. This means that if you have any questions about your income tax, you should continue to contact HMRC.

If you are a Scottish taxpayer and have PAYE income during 2016/17, you should have a Scottish PAYE tax code (an “S” code).

The definition of a Scottish taxpayer is the same for the Scottish rates and thresholds as it is for SRIT. LITRG is currently updating its guidance in respect of the new rates and thresholds, and this will appear in the group’s ‘tax basics’ section in April.

NB: Make sure HMRC have your correct and up-to-date address

It is important to make sure that HMRC have your correct and up-to-date address. This is not the only factor in determining Scottish taxpayer, but it will be decisive in many cases.

Useful links

CIOT blog on Scottish income tax rates and thresholds – what do the changes mean for Scottish taxpayers?

LITRG information about the Scottish rate of income tax

About The Author

The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation to give a voice to those who cannot afford to pay for tax advice. LITRG comprises tax specialists from professional practice and the voluntary sector, from publishing and from HM Revenue & Customs, together with people from a welfare benefits and social policy background. Visit www.litrg.org.uk for further information.
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Fick1995 11/06/2020 11:06

Scotland’s 'old' taxes which includes Council Tax and Business Rates, and its new ones (Land and Buildings Transaction Tax and Landfill Tax) in addition to its maximum current tax, the Scottish Rate of Income Tax (SRIT). It also discusses the taxes with the intention to be devolved via the Scotland Act 2016 and how this could have an effect on the block grant. The Scotland Act 2016 acquired Royal Assent on 23 March 2016. SRIT got here into impact from 6 April 2016 and will be superseded by way of the devolution of earnings tax on non-savings, non-dividend profits in April 2017. <br /> <br /> <br /> https://bogusbraxtor.ph

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