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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Scottish rate of income tax

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Background

The Scottish rate of income tax (SRIT) as introduced by the Scotland Act 2012, will be charged on the non-savings and non-dividend income of those defined as Scottish taxpayers and started in April 2016.

The definition of a Scottish taxpayer is focused on where an individual lives, or resides, in the course of a tax year. Scottish taxpayer status applies for a whole tax year. It is not possible to be a Scottish taxpayer for part of a tax year therefore it is important that when creating a new SA record the ‘Base address effective from’ box is completed. Likewise when recording a change of address, the date of the change must be recorded. Further information on this subject can be found at SAM101270 ‘Maintaining addresses’ and how to record the change in the Taxpayer Business Guide (TBS) at TBSG055 ‘Enter or amend address’.

For tax years 2016-2017 onwards, the Scottish taxpayer (STp) status can be seen in the `Tax year overview’ screen in `View L & P’ but the Taxpayer Business service (TBS) should be used to view the Scottish Main place of residence status (SMPR) start and end dates.

Definition of a Scottish taxpayer

For an individual to be a Scottish taxpayer, they must be resident in the UK for tax purposes and have their sole or main place of residence in Scotland.

Individuals who have more than one place of residence in the UK need to determine which of these has been their main place of residence for the longest period in a tax year – if this is in Scotland, they are a Scottish taxpayer. For example, if an individual with a single place of residence moves house into, or out of, Scotland part way through a tax year, deciding whether they will be a Scottish taxpayer in that year or not will depend on which house is their main place of residence for the longer amount of time.

Individuals who cannot identify a main place of residence will need to count the days they spend in Scotland and the days they spent in other parts of the UK. For example, if they spend 125 days in Scotland, 120 days in Wales and 120 days in England, as they have spent the most time in Scotland, they will be a Scottish taxpayer. Where this applies, they will be treated as a Scottish taxpayer for the whole year.

Note: Only HMRC can decide an individual’s taxpayer status. An employer cannot make this decision or inform HMRC of an employee’s taxpayer status

 

Exceptions

There are separate rules which apply to Scottish Parliamentarians. All Scottish parliamentarians will be Scottish taxpayers wherever they live, and an individual is a Scottish Parliamentarian for a tax year if for the whole year, or any part of that year, they are:-

  • A Member of Parliament (MP) for a constituency in Scotland
  • A Member of the European Parliament (MEP) for Scotland
  • A Member of the Scottish Parliament (MSP)

Note: Investment income will be taxed at UK rates regardless of an individual’s status and Charities will claim Gift Aid at the UK basic rate. Higher rate and additional rate Scottish taxpayers will reclaim Gift Aid at the Scottish rates.

Terminology

Term/Word Meaning
   
Scottish Main Place of Residence (SMPR) If Scottish taxpayers reside in Scotland for 183 days or more in a year they will be a Scottish resident and liable for SRIT. Where a customer may work in Scotland, and therefore be in Scotland for more than the 183 days per year, they may not necessarily be a Scottish resident. Residency will be established by where they are registered for GP’s, dentists and where their family home is. Residency guidance from Central Policy will also provide supplementary information
Address Effective from date This is an important element from 6 April 2016 and will establish the point where a customer becomes a Scottish taxpayer dependent on the date they class their main place of residence as a Scottish address
     
  S prefix for tax code From April 2016 all Scottish Taxpayers will be identified by an S prefix on their tax code. The notification letter will provide information to customers around this
  SRIT Scottish rate of income tax
  Scottish rate of income tax The rate that the Scottish Parliament sets.
  Scottish taxpayer (STp) Person liable to pay the Scottish rate of income tax
  Scottish basic rate The UK basic rate of income tax, less ten percentage points, plus the Scottish rate of income tax
  Scottish higher rate The UK higher rate of income tax, less ten percentage points, plus the Scottish rate of income tax
  Scottish additional rate The UK additional rate of income tax, less ten percentage points, plus the Scottish rate of income tax
  Scottish main rates Collectively, the Scottish basic rate, the Scottish higher rate and the Scottish additional rate of income tax.
  The main rates of income tax Collectively, the UK basic rate, the UK higher rate and the UK additional rate of income tax