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On 14 December 2017, the Scottish Government announced that, for the first time, it would use its Executive powers to make changes to the rates at which Scottish residents pay income tax.
The new tax rates affect only income taxpayers resident in Scotland and have no effect on any other part of the UK.
The changes are due to come into effect on 6th April 2018, for the 2018/19 tax year.
In summary, the changes are due to affect the taxable income of Scottish residents as follows:
The Scottish Government believes that, combined, these changes mean Scottish residents earning under £26,000 each year will pay marginally less tax than elsewhere in the UK, while tax will not change for those earning less than £33,000 each year.
HMRC will determine whether or not you’re a Scottish taxpayer based on your main place of residence. The Scottish rate of Income Tax is payable for the full year.
Anyone identified as a Scottish taxpayer will have an “S” prefix attached to their PAYE tax code.
|Scottish Bands||Band name||Scottish Rate|
|Over £11,8501 – £13,850||Starter||19%|
|Over £13,850 – £24,000||Basic||20%|
|Over £24,000 – £44,273||Intermediate||21%|
|Over £44,273 – £150,0002||Higher||41%|
1 Assumes individuals are in receipt of the Standard UK Personal Allowance.
2 Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.
Our clients who are resident in Scotland need to be aware of these changes so they can estimate their tax liabilities going forward.
If you are resident in Scotland, even for part of the year, please ensure Crunch and HMRC have been notified. This will ensure you are paying tax correctly.
If you have any questions please contact your client manager.
Over the last few months of 2017 and the whole of January, client managers are busy reminding people of upcoming deadlines and things they’ll need to do to make it easy for them to keep on top of their Self Assessments.