Scottish Income Tax

By December 20, 2017Payroll Outsourcing

Scottish Income Tax 2018 / 19

There were a number of announcements in the Scottish Budget earlier this month, the most significant related to payroll is the introduction of a five tier Scottish income tax system.  These changes affect those employees paying Scottish income tax, which is determined by the main residence of the employee.

Employees paying Scottish Rates will have an ‘S’ suffix to their tax code, such as S1150L, and if an employee needs to notify HMRC of a change of address they can do so here.

The bandings are as follows for an employee with the standard tax allowance –

Personal Allowance (set at UK level) £11 850 0%
Starter Rate (new) £11 850 – £13 850 19%
Basic Rate £13 850 – £24 000 20%
Intermediate Rate (new) £24 000 – £44273 21%
Higher Rate £44 273 – £150 000 41%
Top Rate £150 000+ 46%

This will make for some interesting conversations as tax is already not straightforward, and if ever there are employees that want an explanation of how their net pay was reached there is more opportunity for confusion.  Also note the tax rate changes as well as the changes in bands.

The Scottish Government have an impact document available here and some further guidance available here.