Who is liable to pay Scottish Income Tax?
A Scottish taxpayer is anyone who is a UK taxpayer and has their main place of residence in Scotland.
If you have places of residence both in Scotland and elsewhere in the UK, a variety of factors will be considered in judging where your main residence is. These include where your spouse and/or children live, where you are registered to vote, where you hold club memberships, in addition to where you spend the majority of your time.
Is all of my Income liable to Scottish Income Tax?
No, Scottish Income Tax only applies to “Non Savings/Non Dividend Income”. As a result, Scottish Income Tax is payable on earnings from employment, self-employment, pensions and rental profits, but income tax due on savings and dividends continues to be set by and paid to the UK Government. Therefore, if you own shares which pay dividends or have investment income you will be liable to a combination of both Scottish and UK income tax.
Do I need to prepare a Scottish Tax Return?
No, HMRC is responsible for the collection and management of Scottish income tax, and you will, therefore, report all of your income in a single UK tax return as before.
Let’s assume there is a Scottish and UK taxpayer who both earn £45,000, what are the respective tax liabilities for these taxpayers?
Assuming the standard personal allowance of £11,850 is available then both taxpayers will be liable to income tax on £33,150. The Scottish taxpayer will pay an additional £504 income tax.
What about my pension contribution?
Pension contributions relief at source is given at 20% for all taxpayers. Scottish taxpayers may need to file a tax return to claim extra relief if they are taxed at 21% or 41%.
Where can I find out more?
The HMRC website provides excellent guidance on general queries, and of course the experienced team at MMGA can discuss your personal circumstances to ensure you are paying the right level of tax contribution.