Scottish Income Tax HMRC annual report 2025
Published 11 September 2025
Applies to Scotland
© Crown copyright 2025
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1. Key messages
The latest (2024) third-party data assurance exercise found that HM Revenue and Customs (HMRC) residency information is between 98 to 99% accurate. HMRC will re-run the exercise in 2025.
The majority of employers operate S tax codes correctly. However, a minority of employers (between 1 to 2%) omit the ‘S’ prefix and operate a UK tax code instead.
The total amount of Non-Saving/Non-Dividend (NSND) Income Tax generated by Scottish taxpayers in the 2023 to 2024 tax year was £17.1 billion — an increase of 12.7% compared to 2022 to 2023.
The total number of Scottish taxpayers in the 2023 to 2024 tax year was 2,923,000 — an increase of 5.7% compared to 2022 to 2023.
The Scottish share of UK NSND Income Tax in the 2023 to 2024 tax year was 6.8% — an increase of 0.1 percentage points (PPTS) compared to 2022 to 2023.
2. Purpose
The Scotland Act 2016 provides the Scottish Parliament with Scottish Income Tax (SIT) powers. It enables the Scottish Parliament to set the Income Tax rates and thresholds that apply to the non-savings and non-dividend income of Scottish taxpayers. The Income Tax Personal Allowance remains reserved to the UK Parliament.
The tables below show how the power to set SIT was exercised in 2024 to 2025. The 2024 to 2025 UK rates are included as a comparison.
Scottish Income Tax and rest of UK Rates in 2024 to 2025
The 3 key changes to SIT that took effect in 2024 to 2025 were:
- the Starter and Basic rate bands were increased by inflation to £14,876 and £26,561
- a new Advanced rate was added at a rate of 45p applying to income over £75,000
- an additional 1p was added to the top rate, increasing the rate from 47p to 48p on income over £125,140
Scottish rates and bands 2024 to 2025
| Band | Rate | Taxable income |
|---|---|---|
| Starter rate | 19% | £12,571 - £14,876 |
| Basic rate | 20% | £14,877 - £26,561 |
| Intermediate rate | 21% | £26,562 - £43,662 |
| Higher rate | 42% | £43,663 - £75,000 |
| Advanced rate | 45% | £75,001 - £125,140 |
| Top rate | 48% | £125,141+ |
UK rates and bands 2023 to 2024
| Band | Rate | Taxable income |
|---|---|---|
| Basic rate | 20% | £12,571 - £50,270 |
| Higher rate | 40% | £50,271 - £125,140 |
| Additional rate | 45% | £125,141+ |
HMRC administers SIT through existing Pay As You Earn (PAYE) and Self Assessment processes, including through existing approaches to Income Tax compliance and communications. This ensures the correct amount of tax is collected. In the vast majority of cases Scottish taxpayers will notice no difference in how HMRC interacts with them.
One of the key requirements of HMRC’s administration of SIT is for HMRC to report annually on its delivery of the agreed services. This report sets out information about HMRC’s administration in 2024 to 2025, covering:
- identification and assurance of Scottish taxpayers
- compliance activity
- the collection of and accounting for SIT revenues
- data for SIT rate setting and forecasting
- customer service and support
- governance and oversight of SIT
- the costs of delivering SIT and recharging of these costs to the Scottish Government
3. Identification and assurance
Who is a Scottish taxpayer?
For most people, whether they are a Scottish taxpayer in a given tax year is straightforward. Individuals who live in Scotland and have their sole or main place of residence there, are Scottish taxpayers. Those whose sole or main place of residence is elsewhere in the UK are not Scottish taxpayers.
If a person has more than one place of residence, their main place or places of residence determines where they pay Income Tax. If a person has 2 or more ‘main places of residence’ in different parts of the UK, they will be a Scottish taxpayer if their main place of residence was in Scotland for more of the year than any other part of the UK.
Members of the UK Parliament representing Scottish constituencies and Members of the Scottish Parliament are also Scottish taxpayers, regardless of their residence. As they are not subject to the normal residency rules, we operate a separate process to ensure they have the correct residency status applied on our system.
Identification and assurance work
The National Audit Office’s (NAO) report on the Administration of SIT highlights, in paragraph 13 of the Key Findings, that identifying Scottish taxpayers is the key challenge of HMRC’s administration of SIT in 2023 to 2024. There is no definitive data set of Scottish residents against which to judge success, but we are confident in our identification of Scottish taxpayers as detailed below.
HMRC has built a new longitudinal dataset covering the incomes and location of UK taxpayers over a 12-year period from tax year ending 2010 to tax year ending 2022. The Scottish population is not static, and the dataset is used to look at trends on the number of individuals moving to and from Scotland and rest of UK (England, Northern Ireland, and Wales).
While there were high levels of migration between Scotland and the rest of the UK (between 20,000 and 35,000 moving in each direction every year), there were minimal levels of net migration to Scotland (between -1,500 and +1,500) from the rest of the UK between tax years ending 2011 and 2017. Beyond year ending 2017, the first year where Income Tax was (partially) devolved, net migration to Scotland increased on a yearly basis, to around 8,000 individuals in tax year ending 2022, made up of about 37,000 moving from the rest of the UK to Scotland and 29,000 moving in the other direction. The number of individuals moving will not be the same every year.
Identifying Scottish taxpayers is an on-going process, and we work closely with the Scottish Government to ensure this remains robust.
Third-party data assurance exercise
HMRC engages an external supplier to carry out a third-party data assurance exercise. This compares data held by HMRC with that from the third party to assess the accuracy of HMRC’s address data with respect to the identification of Scottish taxpayers. Under our current arrangements with the Scottish Government, we conduct a data assurance exercise every year. The latest report is available in Annex A, Third-Party Data Assurance Exercise 2024.
Data updates
Postcodes, and the properties within them, occasionally change to reflect new build properties and subdivision of existing properties. HMRC receives quarterly postcode updates from the Office of National Statistics and updates its processes for flagging Scottish residency to ensure ongoing accuracy of HMRC’s record of postcodes and their residency statuses.
| Quarter | Number of new postcodes |
|---|---|
| Quarter 1 | 378 |
| Quarter 2 | 292 |
| Quarter 3 | 294 |
| Quarter 4 | 265 |
| Full year | 1,229 |
Postcode scans
HMRC conducts scans to identify any data quality issues and make corrections. There will always be the need to assure the quality of the data we receive, and this is not an issue specific to SIT. Our address data comes from a variety of sources, including individuals, employers, and other government departments. There are no issues with the vast majority of the address data recorded on our systems, however a small minority requires correcting.
HMRC relies on data from external sources to complete our records. We have a program of work in place to ensure that any data issues for Scottish taxpayer records are identified and corrected, preventing any loss of revenue to the Scottish Government.
The scan to assure the quality of our address data operates in 2 parts:
- identification of taxpayer records with a Scottish postcode prefix but where the postcode is not recorded on HMRC’s list of live and deleted Scottish postcodes
- identification of taxpayer records with a blank postcode but which has a key word in the body of the address that indicates it is a Scottish postcode, for example, Aberdeen
Results of the scan in 2024 to 2025
| Type of error | Employment and pension | Change from 2022-23 |
|---|---|---|
| Invalid postcode | 721 | -15% |
| Blank postcode | 1,094 | +19% |
Although there has been an increase in the number of invalid and blank postcodes, this remains a very small percentage of Scottish postcodes. This is in comparison to the number of Scottish taxpayers which totalled to 2,766,100 in the 2022 to 2023 tax year, all of whom will have a postcode. HMRC monitors trends in this data and keeps its approach to data assurance under review.
HMRC corrected all address records with invalid and blank postcodes where an individual had an employment or pension income. This ensures that the Scottish Government does not lose any tax as a result of data quality issues.
Communications
Communication is crucial to our efforts to accurately identify Scottish taxpayers. HMRC has continued to use the extensive existing communication channels to reinforce key messages on SIT to employers and individuals.
Communications to individuals have been through channels including online social media, the Personal Tax Account, and the Annual Tax Summaries. These communications have focused on the need for customers to update their address details with HMRC when they move.
HMRC’s communications with employers have been through channels including the Employer Bulletin, Agent Update, Customer Compliance Managers’ engagement with large businesses and public bodies, forums for employers, payroll managers and agents, GOV.UK, and online social media. These communications have focused on reminding employers of the importance of them correctly applying the ‘S’ codes issued to them by HMRC.
Employers’ application of Scottish tax codes
When HMRC identifies an individual in PAYE as a Scottish taxpayer, a tax code is issued to their employer for them to operate. All tax codes for Scottish taxpayers have an ‘S’ prefix. The vast majority of employers operate the codes issued to them. However, a small minority make errors and operate codes without the ‘S’ prefix. This means that the rest of UK rates of tax are applied instead of the Scottish rates.
Individuals affected by these errors are still identified as Scottish taxpayers by HMRC, and the correct amount of tax is paid to the Scottish Government. There is therefore no loss of revenue to the Scottish Government, as we use our identification to calculate the SIT outturn. Although some individuals may pay the wrong amount of tax in-year, HMRC’s end of year reconciliation process ensures that any over or under-payments are corrected. It is therefore important that codes are correctly applied in year to minimise the under- or overpayments that taxpayers would face at that end of year reconciliation. HMRC supports employers to correctly apply the Scottish codes issued to them. We carry out regular scans to monitor the proportion of employments that are missing the ‘S’ prefix.
HMRC do not monitor the number of individuals who are due a refund or owe more tax after the reconciliation process.
Employments missing the ‘S’ prefix
| Month | % of employments missing the ‘S’ prefix in 2024-25 | % of employments missing the ‘S’ prefix in 2023-24 | % of employments missing the ‘S’ prefix in 2022-23 | % of employments missing the ‘S’ prefix in 2021-22 |
|---|---|---|---|---|
| April | 1.26% | 1.22% | 1.06% | 1.18% |
| July | Data unavailable | 1.48% | 1.43% | 0.82% |
| October | Data unavailable | 1.38% | 1.33% | 0.93% |
| January | Data unavailable | 1.35% | 1.26% | 1.11% |
Data for July 2024, October 2024 and January 2025 is unavailable. This scan was decommissioned in May 2025. The Chief Digital Information Office department is building a new report.
The issue of employers not applying the codes issued to them by HMRC is much broader than SIT and may reflect wider challenges employers are facing in operating PAYE. In many cases, an employer failing to apply ‘S’ codes arises from a software error or missing update.
Our approach to tackling missing ‘S’ prefixes therefore focuses on reminding, educating, and supporting employers to correctly apply the codes issued to them. Where this is not happening, we reissue codes to employers to notify them of the error and, where possible in cases where employers are continually getting this wrong, we contact the employer to understand why and help them to get it right.
This approach has successfully reduced the error rate for employments missing the ‘S’ prefix from around 4% in 2019 to 2020 to around 1.26% in April 2024. We will continue to work with the Scottish Government and employers to maintain the error rate at a low level.
4. Compliance
Compliance checks into tax affairs of Scottish taxpayers
HMRC applies risk-based compliance activity to the collection of SIT in the same way as is applied to the collection of Income Tax from taxpayers in the rest of the UK. The Scottish Government is not recharged for this activity.
HMRC currently assesses the risk of a non-compliant behavioural response from customers as a result of the differences between income tax rates and thresholds in Scotland and the rest of the UK to be low.
The changes to SIT in 2023 to 2024 involved increasing rate bands, introducing a new Advanced Rate, and increasing the top rate. There is a divergence at the UK and Scottish higher rate threshold. The threshold in Scotland remained at £43,662, and at £50,270 in the rest of the UK.
At higher incomes, the differential between the top rate in Scotland and the additional rate in the rest of the UK is growing over time. While the 2 percentage point difference in the Scottish higher rate and 3 percentage point difference in the Scottish top rate for the 2023 to 2024 tax year remains relatively modest, it is an area that will need monitoring, especially if the differential widens further.
Address assurance
For all individuals, whether in Self Assessment or PAYE, HMRC monitors cross-border migration trends through comparison of the customer base, analysis of tax returns and changes to tax accounts to identify possible evidence of customer behavioural response.
HMRC also validates the accuracy of reported moves and the completeness of its address data. HMRC will continue communications activity to customers, reinforcing the need to update address details with HMRC when they move.
Compliance Working Group
In 2024, the SIT Board set up a Compliance Working Group to monitor the potential impacts of increasing Income Tax divergence on taxpayer behaviour and compliance. The group meets on a quarterly basis and reports to the SIT Board which has oversight of its work on SIT compliance. In 2024 to 2025, topics included identifying indicators of non-compliance, taxpayers with properties outside Scotland, and developing new statistical products.
Building insight
HMRC reviewed data from openly available public sources, before and after tax band/rate changes in April 2024. Most relevant online discussion covered legitimate tax planning, with very little mention of potential avoidance or evasion methodologies. Due to the nature of the analysis, it was based on a wholly unrepresentative sample so no firm conclusions can be drawn from it.
Wealthy individuals
HMRC continues to use its existing Customer Compliance Manager model and other interactions with wealthy customers to raise awareness, educate customers about their SIT obligations and assess compliance risk related to misrepresentation of Scottish taxpayer status or understatement of income liable to SIT. A specific SIT lead within HMRC’s Wealthy Taxpayer Unit oversees activity in relation to these customers.
Timing
In addition to the Real Time Information (RTI) reviews carried out in-year, the end of year PAYE reconciliation programme checks the tax deducted against the tax due for all customers. Any underpayments are collected from the customer, usually through an adjustment to the subsequent year’s PAYE code, and any overpayments are refunded.
Self-employed customers are on an annual return cycle and Self Assessment returns for 2023 to 2024 tax year were not required to be submitted until January 2025. Compliance checks on 2022 to 2023 returns would therefore generally commence in 2025, although enquiries may be opened earlier for returns submitted before the deadline.
The majority of enquiries into 2023 to 2024 returns do not, however, begin immediately after the submission of returns as assessments of risk must take place first.
5. SIT revenues, rate setting and forecasting
HMRC collects SIT through the PAYE and Self Assessment systems. It pays SIT revenues into the UK Consolidated Fund and these revenues are subsequently transferred to the Scottish Government and the Scottish Government’s resource block grant is reduced accordingly, reflecting its revenue-raising powers.
In July 2025 HMRC released a statistical publication, SIT Outturn Statistics 2023 to 2024, which included the information shown in the HMRC accounts and further breakdowns of SIT and equivalent information for taxpayers in the rest of the UK. The outturn is calculated following the submission deadline for Self Assessment returns, meaning there is a delay between the end of the tax year and the publication of the outturn for that year. The 2024 to 2025 outturn will not be published until 2026.
From tax year 2019 to 2020, a proportion of Income Tax paid by taxpayers living in Wales has been transferred to the Welsh Government through the introduction of the Welsh Rates of Income Tax (WRIT). WRIT is controlled by the Welsh Government. HMRC publishes separate statistics on WRIT. This means it is no longer appropriate to include Welsh NSND Income Tax when comparing Scottish NSND Income Tax growth to non-Scottish NSND Income Tax growth.
SIT outturn 2023 to 2024
For 2023 to 2024, the amount of Income Tax attributable to the Scottish Government budget was £17.1 billion.
The table below shows the revenue from Income Tax on NSND income for SIT and rest of UK (rUK) taxpayers in 2023 to 2024. The table also shows the components of the figures. The rUK figure does not include any tax on NSND income from Scottish taxpayers, as it is all SIT.
2023 to 2024 Total Income Tax Revenue from NSND Income of Scottish and non-Scottish Taxpayers (based on Scottish powers from Scotland Act 2016)
| Revenue | rUK NSND (£ billion) | Scottish NSND (£ billion) | Scottish Share of Total UK NSND (%) |
|---|---|---|---|
| Self Assessment established liability | 122.474 | 6.598 | 5.0% |
| PAYE established liability | 103.855 | 10.558 | 8.9% |
| Estimated further liability: late tax returns and compliance yield | 6.202 | 0.376 | 5.6% |
| Less: adjustment for uncollectable amounts | (1.402) | (0.091) | 5.9% |
| Relief at Source | (2.595) | (0.223) | 7.6% |
| Gift Aid | (1.416) | (0.126) | 7.8% |
| Final revenue for the tax year 2023-24 | 227.119 | 17.093 | 6.8% |
The time lag in confirming the actual SIT outturn amount for 2023 to 2024 is due to the PAYE and Self Assessment processes.
To administer PAYE for taxpayers, HMRC undertakes an end of year reconciliation to assess whether individuals have paid too much or too little tax in any given tax year. Similarly, taxpayers are not required to submit online Self Assessment returns to HMRC until 10 months after the end of the tax year to which they relate.
Data for SIT rate setting and forecasting
HMRC has worked closely with the Scottish Government to develop an agreed work plan. This details the analysis and data that HMRC will provide to the Scottish Government to support them in their analytical work.
Officials meet regularly to ensure new priorities are discussed and factored in against existing commitments. As part of this, both parties have agreed what new information would be useful to help provide more understanding of the SIT outturn.
HMRC has also produced and shared other information to support the Scottish Fiscal Commission’s forecasting and the calculation for the block grant adjustment.
HMRC provides the Scottish Government with relevant data for SIT, alongside the Scottish Fiscal Commission. At a UK level, these tasks are fulfilled using the Survey of Personal Incomes (SPI).
The SPI is compiled to provide a quantified evidence base from which to cost proposed changes to tax rates, personal allowances and other tax reliefs for UK Treasury Ministers. It is used to inform policy decisions within HMRC and HM Treasury, as well as for tax modelling and forecasting purposes.
The SPI is based on information held by HMRC on individuals who could be liable to UK tax. It is carried out annually by HMRC and covers income assessable to tax for each tax year. Not all individuals are taxpayers because the operation of personal reliefs and allowances may remove them from liability. Where income exceeds the threshold for operation of PAYE, the survey provides the most comprehensive and accurate official source of data on personal incomes.
HMRC continues to work closely with the Scottish Government and Scottish Fiscal Commission to ensure the information provided meets their requirements and supports forecasting and rate setting for Scotland. This SPI data set will subsequently be published to enable researchers and academics to use it for statistical purposes.
In addition to this, HMRC delivered a variety of analytical outputs on SIT for devolved stakeholders since last year’s annual report, including:
- publishing the SIT and rUK equivalent outturn for 2023 to 2024
- producing forecasts of SIT and rUK Income Tax for the Office for Budget Responsibility (OBR) at Autumn 2024 and Spring 2025
- evaluating the March 2022 forecast for 2022 to 2023 SIT for the OBR, feeding into March 2025 Devolved tax and spending forecasts producing the Provisional Estimate for 2024 to 2025 SIT for HMRC’s annual report and accounts 2024 to 2025
- sharing Income Distribution Analysis for the 2023 to 2024 SIT outturn
- delivering monthly RTI data on PAYE taxpayers
- sharing the Public Use Tape (PUT) version of the 2022 to 2023 Survey of Personal Incomes
6. Customer service and support
HMRC applies the same level of customer service, support and transparency to Scottish taxpayers as is applied to Income Taxpayers in the rest of the UK.
HMRC administers SIT as part of the UK Income Tax system. In the vast majority of circumstances Scottish taxpayers will notice no difference in the manner in which HMRC interacts with them. This approach also ensures that the correct amount of tax is collected.
SIT is collected through existing PAYE and Self Assessment processes, which have been adapted to reflect SIT rates and thresholds. Scottish taxpayers can use HMRC’s usual guidance and customer contact channels for advice and information.
In the majority of areas customer service provided to Scottish taxpayers will therefore be included and reported within HMRC’s UK-wide customer service reporting.
The customer service and support for Scottish taxpayers, agents, and employers that HMRC has incorporated into its existing processes includes the following:
- providing all Scottish taxpayers and their employers with Scottish tax codes prior to the start of the tax year
- annual tax summaries issued to all Scottish taxpayers
- updating online calculators prior to the start of the tax year with the SIT rates/thresholds set by the Scottish Parliament to ensure they remain accurate for Scottish taxpayers
- guidance for payroll software providers on how to correctly incorporate Scottish rates/thresholds into their PAYE products for employers
- guidance on how Scottish taxpayer status is decided and what to do if Scottish taxpayers feel HMRC has wrongly identified their status
- encouraging customers to update their personal details, focusing on the use of Personal Tax Account
- issuing paper tax tables to digitally exempt employers prior to the start of the tax year reflecting Scottish rates and thresholds
While most interactions Scottish customers have with HMRC are via existing processes, and the customer service therefore reported within UK figures, some aspects of customer service are specific to SIT. For example, guidance on Scottish taxpayer status and the ability to discuss with HMRC if there are disagreements over the Scottish residency status given.
It is important that HMRC can demonstrate that its customer service in these areas matches what it provides across the UK as a whole. The Service Level Agreement (SLA) between HMRC and the Scottish Government therefore commits HMRC to collect and report on key, SIT specific, customer contact metrics. The key metrics for 2024 to 2025 are outlined in Annex C to this report, the Annual Business Intelligence report.
7. Governance and oversight
Governance arrangements
The governance arrangements in place for HMRC’s administration of SIT ensure that we are fulfilling our obligations and meeting the needs of the Scottish Government. HMRC’s administration of SIT is governed jointly by HMRC and the Scottish Government, and we work closely with them to ensure that there is sufficient oversight of our administration of SIT.
Service Level Agreement
Our SLA with the Scottish Government sets out HMRC’s obligations for administering SIT, and the performance measures for monitoring this. It ensures a consistent quality of service to Scottish taxpayers and allows HMRC and the Scottish Government to meet their respective responsibilities.
The SLA is reviewed annually by HMRC and the Scottish Government. For the 2024 to 2025 tax year the SLA was not updated.
The signatories to the SLA in HMRC and the Scottish Government meet twice a year to review HMRC’s progress in administering SIT.
SIT Board
The SIT Board meets quarterly to review HMRC’s administration of SIT. It is comprised of representatives from both HMRC and the Scottish Government, drawing its membership from areas across HMRC which have a key role to play in our administration of SIT. Chairing responsibilities are shared between HMRC and the Scottish Government.
In 2024 to 2025, the SIT Board discussed a range of matters related to HMRC’s administration of SIT. This included restructuring the SIT board, approving the methodology for calculating the 2023 to 2024 Scottish outturn, agreeing the proposed changes to the SLA, compliance in relation to SIT due to increased divergence between SIT and UK income tax rates and reviewing the Compliance Plan for 2023 to 2024.
During the 2024 to 2025 tax year, SIT Board hybrid meetings alternated between London and Edinburgh.
The SIT Board meeting minutes and terms of reference have been published since the 2023 to 2024 tax year. These are currently available on both the GOV.UK and GOV.SCOT websites.
Scottish Income Tax Stakeholder event
The SIT Board agreed to engage with external stakeholders by organising an annual stakeholder event on the administration of SIT.
The most recent SIT stakeholder event took place on 20 November 2024 in Edinburgh. The event focussed on obtaining different perspectives from external stakeholders on the issues and opportunities regarding the administration of Scottish Income Tax.
HMRC have used the feedback received to explore ways to improve the Scottish taxpayer customer journey.
This year, the Scottish Government held a Tax Conference on 10 September 2025.
Devolved Analytical Working Group
The Devolved Analytical Working Group is comprised of representatives from HMRC, the Scottish Government, the Welsh Government, the Office for Budget Responsibility, and the Scottish Fiscal Commission.
The working group meets regularly, and discusses, among other things, the methodology HMRC uses to calculate the SIT outturn, and other analytical work carried out by HMRC for the Scottish and Welsh Governments.
Financial arrangements
Under the Fiscal Framework Agreement between the UK and Scottish Government, the Scottish Government reimburses HMRC for net additional costs wholly and necessarily incurred as a result of the implementation and administration of SIT.
HMRC has a robust process in place to ensure that we accurately identify the costs of administering SIT. We ensure we provide the Scottish Government with sufficient evidence to allow the Scottish Government to assure itself of the accuracy of the costs to be recharged.
As part of this process, we have a Rechargeable Costs Framework to set out our approach to and obligations for recharging costs to the Scottish Government. This is annexed to the SLA and is reviewed annually.
We provide the Scottish Government with a report each month to ensure they have a timely view of the costs to be recharged, which happens on a quarterly basis. An invoice is only raised once the SIT Board is satisfied that the costs are accurate.
In 2024 to 2025, the costs recharged to the Scottish Government by HMRC for the administration of SIT were:
Costs HMRC recharged to the Scottish Government for SIT administration in 2024 to 2025
| Quarter (£ million) | Implementation and operating costs |
|---|---|
| Quarter 1 | 0.09 |
| Quarter 2 | 0.09 |
| Quarter 3 | 0.18 |
| Quarter 4 | 0.13 |
| Full year | 0.50 |
HMRC recharges both the costs of implementing and the costs of operating SIT. Implementation costs were the initial costs of setting up HMRC’s administration of SIT, whilst operating costs are the day-to-day costs of this administration.
The charts below show the historic costs of implementing and operating SIT that have been recharged to the Scottish Government, and how implementation costs have, over time, reduced. If the Scottish Government were to make further changes to SIT, there would likely be further implementation costs.
Costs of implementing and operating SIT recharged to the Scottish Government in previous years
Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.
| Cost | 2014-15 (£ million) | 2015-16 (£ million) | 2016-17 (£ million) | 2017-18 (£ million) | 2018-19 (£ million) | 2019-20 (£ million) | 2020-21 (£ million) | 2021-22 (£ million) | 2022-23 (£ million) | 2023-24 (£ million) | 2024-25 (£ million) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Implementation costs | 1.97 | 8.13 | 6.08 | 4.48 | 2.04 | 0.56 | Not applicable | Not applicable | Not applicable | 0.43 | Not applicable |
| Operating costs | Not applicable | Not applicable | 0.17 | 0.35 | 0.78 | 0.89 | 0.72 | 0.60 | 0.59 | 0.56 | 0.50 |
| Total cost of SIT invoiced in financial year | 1.74 | 8.36 | 6.25 | 4.83 | 2.82 | 1.45 | 0.72 | 0.60 | 0.59 | 0.99 | 0.50 |
Notes:
- Costs were first incurred for 2012 to 2013, however this table focuses on more recent costs.
- For ‘total cost of SIT invoiced in financial year’, figures shown may not be an exact sum of implementation and operating costs due to invoicing schedules.
- The implementation costs in 2023/24 relate to the Advanced Rate.
External scrutiny
In addition to the internal governance structure agreed by HMRC and the Scottish Government, HMRC’s administration of SIT is also overseen by several external bodies.
The National Audit Office
The NAO audits HMRC’s administration of SIT annually. In January 2025, the NAO published its report into HMRC’s performance in 2023 to 2024. Paragraph 12 of the Key Findings found that ‘HMRC has adequate rules and procedures in place to ensure the proper assessment and collection of SIT and it is complying with those rules.’
The NAO did not make any recommendations for improvement, and their positive assessment of HMRC’s administration of SIT provides us with assurance that we are fulfilling our obligations and maintaining a high level of service to both the Scottish Government and Scottish taxpayers.
The NAO’s report into HMRC’s administration of SIT in 2024 to 2025 is expected to be published in January 2026.
Audit Scotland
Audit Scotland also report on HMRC’s administration of SIT, and their report into HMRC’s performance in 2023 to 2024 was published in January 2025. Their findings reflected those of the NAO, and they commented that ‘The NAO’s approach to providing assurance over Scottish Income Tax is reasonable and covers the key audit risks.’
Scottish Parliament
HMRC administers SIT on behalf of the Scottish Government, and as such is also accountable to the Scottish Parliament for our performance in doing so. As part of the implementation of SIT, HMRC appointed an Additional Accounting Officer (AAO), who is available to give evidence to committees of the Scottish Parliament. The current AAO is Jonathan Athow, Director General for Customer Strategy and Tax Design.
Scottish Public Audit Committee
Following the publication of the NAO’s audit report, the Scottish Public Audit Committee, invited HMRC to attend an evidence hearing on 26 March 2025. Jonathan Athow and Phil Batchelor (Deputy Director, Income Tax Policy) gave evidence on the administration of SIT for the 2023 to 2024 tax year.
8. Forward Look 2025 to 2026
Scottish Income Tax communications
HMRC and the Scottish Government are working to improve internal and external SIT communications which includes the guidance available on their respective GOV.UK and MYGOV.SCOT websites. The aim is to improve taxpayer understanding of SIT, build public awareness and promote voluntary compliance.
This work on SIT communications is in response to feedback received from stakeholders that attended the SIT stakeholder event in 2023, and changes to SIT rates and thresholds.
Statistical products
HMRC and the Scottish Government are exploring statistical products that could provide new insight into levels of SIT non-compliance.
Annex A: Third Party Data Assurance Exercise 2024
Outcome of the Third-Party Data Assurance exercise
Table 1a: GB Group unmatched records removed by KAI
| GB Group unmatched records | Amount removed by KAI |
|---|---|
| Duplicates | 5,497 |
| Deceased | 3,921 |
| Under 18 | 97,197 |
| Resident abroad | 17,949 |
Table 1b: GB Group unmatched records matched by KAI
| GB Group unmatched records | Amount matched by KAI |
|---|---|
| Matched to Scotland | 1,170,722 |
| Matched to rUK | 13,634 |
| Unmatched | 254,887 |
Table 1c: GB Group unmatched records totals matched by GBG and KAI and percentage adjusted totals
| GB Group unmatched records | Total matched by GBG and KAI | % adjusted total |
|---|---|---|
| Matched to Scotland | 5,139,786 | 94.96% |
| Matched to rUK | 17,921 | 0.33% |
| Unmatched | 254,887 | 4.71% |
Table 2: Number of disagreements between KAI and Third-Party data sources
| Year | Number of Scottish records matched to rUK third-party address | Number of rUK records matched to Scottish third-party address |
|---|---|---|
| 2019 | 4,009 | 4,578 |
| 2021 | 5,108 | 3,239 |
| 2023 | 5,167 | 3,373 |
| 2024 | 4,287 | 2,730 |
Methodology
Knowledge, Analysis and Intelligence (KAI) sent GB Group approximately 90 million records sourced from Citizen Identification Framework (CID), as part of assurance of HMRC address data.
In order to provide assurance of HMRC address data, GB Group performed a matching exercise of the CID records against third party data sources, such as the electoral register and credit records.
Following the completion of this exercise, GB Group sent KAI reports outlining the number of records successfully matched to a country, the number of contradictory address records (by country) and the number of records that are not matched to any address in third party data.
Alongside this report, GB Group sent KAI a list of National Insurance numbers (NINO) and Temporary Reference numbers (TRNs) [footnote 1] that did not match to a third-party source.
KAI seek to corroborate these records and identify their most recent address/country information in HMRC tax data. This is performed by:
- removing duplicate NINOs and TRNs from the initial list
- matching the records to a number of HMRC systems, such as using CESA/NPS and RTI to identify deceased individuals, individuals under 18 and individuals residing abroad
- records which are identified as deceased, under 18 or residing abroad are removed from the initial unmatched list
- remaining records that match to HMRC systems are assigned to a region/country based upon a valid postcode and the corresponding Government Office Region (GOR) (region) and International Territorial Level (ITL2) region associated with the postcode. This is obtained by matching extracted postcodes to a postcode lookup table for GOR Codes and assigning a corresponding Income Tax Regime region based on the first letter of this variable
Results: GB Group matching exercise
Of 5,537,158 Scottish records:
- 3,969,064 (71.68%) records were matched to a Scottish address that had a Scottish address in CID
- 4,287 (0.08%) records were matched to an rUK address but had a Scottish address in CID
- 1,563,807 (28.24%) Scottish records were not matched to any address
For cases b), a letter was sent to the individual asking them to update their address data.
GB Group also found 2,730 records in the CID data with an rUK address but matched to a Scottish address in the third-party data — these individuals were also sent a letter asking them to update their address.
Results: KAI matching exercise
As outlined, KAI matched the 1,563,807 uncorroborated records to HMRC systems and:
- removed 5,497 duplicate NINO’s/TRN’s from the initial list
- removed 97,197 records where the individual was under the age of 18 when the assurance exercise was carried out:
- of these individuals: 87 were under 16, 50,551 were 16 and 46,559 were 17
- removed 17,949 records where the individual was identified as residing abroad
- removed 3,921 records where the individual was identified as deceased
- identified 1,170,722 records where the individual had a Scottish GOR Code (81.34% of the initial, adjusted unmatched list — 1,439,243)
- identified 13,634 records where the individual had an rUK GOR Code
- we were unable to corroborate 254,887 records. Of these:
- 246,460 (96.69%) were TRNs which is 4.45% of the original list of 5,537,158 Scottish individuals send to GB Group (with duplicates, deceased and overseas cases excluded)
- 8,427 (3.31%) were NINOs
See Table 1a to Table 1c for further detail.
Conclusion
After the completion of both KAI’s and GB Groups’ components of this third-party matching exercise, it is shown that HMRC’s taxpayer status for Scottish residing taxpayers was correct in 94.96% of cases (when duplicates, deceased, under 18 and overseas cases are excluded). However, when considering cases where a match was made, 5,139,786 out of 5,157,707 cases were matched as Scottish (99.65% of the matched total).
Therefore, across the 2 stages, only 0.33% of these records were identified as residing in rUK when CID provided a Scottish address. And just 254,887 (4.71%) of the total list in CID remain uncorroborated, with most (96.69%) of these being TRNs.
When considering this figure in the context of the overall accuracy of HMRC’s identification of Scottish taxpayers it is important to bear in mind that this population does not correspond to distinct, active Scottish taxpayers in any single given year. It represents records (as opposed to individuals) held in HMRC’s CID data, which could be historic accounts that are no longer active; or TRNs which belonged to individuals that have subsequently been allocated a NINO. So, an uncorroborated taxpayer status doesn’t mean an incorrect taxpayer status.
We are therefore confident that the proportion of correctly identified Scottish cases in HMRC’s data will likely be around 98%-99% when we only consider records which are currently active in Self Assessment or RTI. The uncorroborated cases are likely to be in respect of ceased or inactive accounts which explains why KAI have been unable to identify them in either the Self Assessment or RTI data. There may also be some cases where postcode information has been incorrectly input, or an expired postcode has been input meaning that a GOR Code cannot be allocated to the record. There is no risk to SIT of failing to corroborate these records as Scottish since there will be no Income Tax liability for them.
This gives confidence that HMRC has correctly identified around 99% of currently active Scottish taxpayers from our CID data as living in Scotland.
At the August 2024 SIT board KAI introduced a number of proposals to take forward in respect of determining the timing of future Third-Party data assurance exercises — option 3 was agreed upon. This approach involves comparing the number of records with a mismatch of location between KAI and third-party data sources.
Table 2 shows that the number of Scottish records (based on KAI data) corroborated as rUK resident in third-party data has decreased from 5,167 in 2023 to 4,287, same figures for rUK records corroborated as having a Scottish address in third-party data has decreased from 3,373 in 2023 to 2,730 in 2024.
We agreed to run the data matching exercise annually for another year to make up 3 consecutive years. If the very low number of mismatches between HMRC and third-party address data continue to show, we would then suggest returning the data clash to every 2 years.
Annex B: Annual business intelligence report 2024 to 2025
Customer contact: telephone
HMRC has a SIT telephone route within the HMRC Personal Tax helpline. This gives customers generic, pre-recorded SIT messages prior to speaking to an HMRC customer adviser. These figures do not represent all calls by Scottish taxpayers to HMRC.
Phone calls received and answered
| Calls | 2024-25 | 2023-24 | 2022-23 | 2021-22 | 2020-21 |
|---|---|---|---|---|---|
| Calls received | 199 | 339 | 263 | 195 | 141 |
| Calls answered | 133 | 235 | 193 | 164 | 110 |
Customer contact: complaints
HMRC tracks all SIT customer complaints to ensure they are processed within the HMRC customer service targets. These figures do not represent all customer complaints received from Scottish taxpayers.
Customer complaints and response targets
| Complaints and response target | 2024-25 | 2023-24 | 2022-23 | 2021-22 | 2020-21 |
|---|---|---|---|---|---|
| Number of complaints | 19 | 31 | 34 | 39 | 45 |
| 15 day response target (80%) met | 76% | 70% | 71% | 47.5% | 57% |
Web pages monitored
HMRC has several SIT-related webpages on GOV.UK and hits to these pages are monitored:
- Income Tax in Scotland
- Guidance: work out if you’ll pay SIT
- Internal manual: SIT guidance
- Tell HMRC about a change in personal details, which is used by customers across the UK
Web hits
| GOV.UK web page | 2024-25 | 2023-24 | 2022-23 | 2021-22 | 2020-21 |
|---|---|---|---|---|---|
| Income Tax in Scotland | 203,347 | 245,859 | 346,915 | 245,829 | 266,882 |
| If you move to or from Scotland | 11,465 | 15,513 | 13,182 | 5,949 | 6,786 |
| Internal manual: Scottish taxpayer guidance | 356 | 509 | 862 | 847 | 1,013 |
| Tell HMRC about a change to your personal details | 754,848 | 1,072,096 | 1,307,931 | 1,332,067 | 1,530,708 |
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A TRN is a number that is allocated by HMRC to records that do not have a matched or known National Insurance Number (NINO). TRNs take the format ‘NN LN NN NN’ (2 numbers, a letter, 5 numbers). TRNs are usually replaced when an individual applies for a NINO from DWP. However, a small number of individuals retain a TRN. ↩