What is the Scottish rate of income tax (SRIT)?

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The Scottish Rate of Income Tax (SRIT) is being introduced as part of the devolved powers transferred to the Scottish Parliament in the Scotland Act 2012.

Scottish taxpayers will have UK rates cut by 10p in the pound, and will then pay an additional Scottish rate, set by the Scottish Parliament. Money raised by the Scottish portion of the new rates will go to the Scottish Government.

To help you understand how the SRIT will affect you, here are some of the most common questions and answers.

Go to 'More questions for employers'

HM Revenue & Customs (HMRC) is responsible for identifying who is a Scottish taxpayer. They're doing this by looking at the current address details they hold.

For most people, if your primary residence is in Scotland, or if you live in Scotland for more than half the year, you'll be considered a Scottish taxpayer.

For more information visit the HMRC website(Opens new window)(Opens new window)(Opens new window)(Opens new window).

HMRC will write to everyone they consider a Scottish taxpayer in December 2015.

From 6 April 2016, you'll have an 'S' prefix added to your tax code if you're a Scottish taxpayer and have employment or pension income taxed under Pay As You Earn (PAYE).

You won't need to do anything as long as HMRC have your current address details. You can advise HMRC of a change of address by visiting their website(Opens new window)

HMRC are writing to everyone they consider a Scottish taxpayer, based on the current address information they hold.

You should contact HMRC if you don't receive a letter but think you're a Scottish taxpayer.

Where your employer is based has no bearing on the rate of income tax you pay.

Whether or not you're a Scottish taxpayer is based on your primary residence, so if you live outside Scotland it's unlikely you'll be a Scottish taxpayer. 

Where your pension provider is based has no bearing on the rate of income tax you pay.

Whether or not you're a Scottish taxpayer is based on your primary residence, so if you live outside Scotland it's unlikely you'll be a Scottish taxpayer.

If your primary residence is in Scotland it's likely you'll be a Scottish taxpayer, however for some people it can be more complex.

For more information about how HMRC is identifying Scottish taxpayers visit their website(Opens new window)(Opens new window)(Opens new window)

You should let HMRC know your new address details straightaway. They'll review your tax position so you pay the correct amount of tax.

The SRIT, as announced by the Scottish Government, is 10 pence in the pound for the tax year 2016/17. This means that Scottish taxpayers will pay basic, higher and additional rates of 20%, 40% and 45% respectively.

The SRIT, as announced by the Scottish Government, is 10 pence in the pound for the tax year 2016/17. This means that Scottish taxpayers will pay basic, higher and additional rates of 20%, 40% and 45% respectively - the same as the rest of the UK.

We’ll use the tax code supplied by HMRC. If you're a Scottish taxpayer, your tax code will have an 'S' prefix and we'll deduct income tax at Scottish rates. Until we have a tax code from HMRC, we’ll use the UK emergency tax code and deduct tax at UK rates, as we do currently, according to HMRC guidance.

We’ll use the tax code supplied by HMRC. If you're a Scottish taxpayer, your tax code will have an 'S' prefix and we'll deduct income tax at Scottish rates. Until we have a tax code from HMRC, we’ll use the UK emergency tax code and deduct tax at UK rates, as we do currently, according to HMRC guidance.

We'll continue to apply the UK basic rate of income tax to payments from uncrystallised funds, according to HMRC guidance. If the amount of tax you pay is incorrect, HMRC will contact you at the end of the tax year.

For personal pensions, your pension provider will continue to add tax relief at UK rates between 6 April 2016 and 5 April 2018, in line with HMRC guidelines. If you're a Scottish taxpayer and the Scottish rates are different to the UK rates, HMRC will contact you at the end of the tax year to make an adjustment.

If you're a member of an occupational scheme, contributions are made before income tax is deducted. Therefore there’ll be no change to this process with the introduction of the SRIT.

HMRC will continue to be responsible for making sure everyone pays the correct amount of income tax.

If you think you're paying the incorrect rate of tax because you've been incorrectly classed as a Scottish (or rest of the UK) taxpayer, you should contact HMRC directly.

More questions for employers

Employees classed as Scottish taxpayers will need to pay the SRIT.

If their primary residence is in Scotland it's likely they'll be a Scottish taxpayer, however for some people it can be more complex. For more information about how HMRC is identifying Scottish taxpayers visit their website(Opens new window)(Opens new window)(Opens new window)(Opens new window).

You'll need to make sure that your payroll system can recognise the 'S' prefixed tax codes so that any employees who are Scottish taxpayers pay the correct amount of tax. Please contact HMRC and/or your payroll provider for more information.