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Scottish Rate of Income Tax 2016/17

On the 11 February 2016 the Scottish Parliament set the Scottish rate of invome tax at 10 per cent (10 pence in the pound) for tax year 2016/17.  The Scottish Government had proposed this rate in the Draft Budget published on the 16 December 2015 (available here).

A 10 per cent rate (10p in the pound) will raise tax receipts equal to the block grant reduction.  Receipts from SRIT will be added to the Scottish block grant.

How the Scottish Rate works

In tax year 2016/17, the UK income tax rates, the basic, higher and additional rates, paid by Scottish taxpayers were  reduced by 10 percentage points (10p in the pound).  Please see SRIT at a glance.

Receipts from SRIT are collected by HMRC and paid to the Scottish Government.

The Scottish Government does not have the power to vary the Scottish rate of income Tax by band.  It can only be applied equally to all tax bands, which means that any change to the rate would affect all basic, higher and additional taxpayers.

Implementing the Scottish rate of income tax, identification of Scottish taxpayers and administering the tax are all matters for the UK Government and Her Majesty’s Revenue and Customs (HMRC).

What does the 10 per cent rate mean for me?

Setting a rate of 10 per cent means there will be no increase in the overall income tax rates that apply to Scottish income taxpayers, regardless of whether you pay the basic, higher or additional rates.  It also means that Scottish taxpayers will pay the same overall income tax as people in the rest of the UK.

Current UK Income tax rates

UK tax rates reduced by 10 percentage points

Scottish rate set by Scottish Parliament for tax year     2016-17

The income tax rates that apply in Scotland in 2016-17

Basic rate 20%

Reduced Basic rate 10%

 

 

 

10%

Reduced UK rate 10% plus Scottish rate 10% = Basic rate of 20%

Higher rate 40%

Reduced Higher rate 30%

Reduced UK rate 30% plus Scottish rate 10% = Higher rate of 40%

Additional rate 45%

Reduced Additional rate 35%

Reduced UK  rate 35% plus Scottish rate 10% = Additional rate 45%

Further information about UK income tax rates and bands and the personal allowance for 2016/17 are available here

Who is a Scottish Taxpayer?

The Scottish rate of income tax is only payable by Scottish taxpayers. HMRC will determine whether or not you are a Scottish taxpayer based on where your main place of residence is. 

HMRC are not sending any electronic communications to customers related to the Scottish Rate of Income Tax - only letters through the post. Anyone receiving an email claiming to be from HMRC regarding SRIT should not open it.

Additional Links

News HMRC’s implementation of SRIT

https://www.gov.uk/scottish-rate-income-tax

Scotland Act 2012

http://www.legislation.gov.uk/ukpga/2012/11/contents

HMRC’s implementation of Scotland Act 2012

https://www.gov.uk/scotland-act-2012

HMRC income tax rates, bands and the personal allowance for 2016/17

https://www.gov.uk/government/publications/summer-budget-2015-hm-revenue-and-customs-overview/summer-budget-2015-hm-revenue-and-customs-overview