There is a new power that the Scottish Parliament will have following the enactment of the Scotland Act 2012 which will affect the amount of income tax that Scottish taxpayers pay. The Government proposes that the Scottish rate will apply from 6 April 2016.
The main UK basic rate of tax is currently 20% with a higher rate of 40% and an additional rate of 50%.
Scottish Parliament will be able to set their rates of income tax lower or higher than the rates that apply in the rest of the UK. If they set a different rate it will apply to all the income tax rates – the basic rate, the higher rate and the additional rate will all go up or down by the same percentage, relative to the UK rate.
The new Scottish rate will affect everyone who is a Scottish taxpayer, which is everyone who lives in Scotland. If you are an employee and a Scottish tax payer your tax code will begin with an S from 2016/2017. All employers will have to operate the Scottish tax codes for their Scottish tax payer employees even if they are based in England.
Although the tax rates may become different, we understand that the tax allowances such as the personal allowance will remain the same as will the income tax rates on income from savings and the relief received on pension contributions and Gift Aid payments made.
If you would like further information, please contact Lucy Metcalf.