Proud to be a Scot?

You may not realise it, but the amount you're taxed relates to where you live. If you live in England, Northern Ireland, Wales or Scotland, tax should be applied relating to where you actually reside. 

If you live in England, Northern Ireland or Wales this shouldn't be a problem as they all apply income tax at the same rates with the same thresholds. However, Scotland's tax rates are slightly different; the Scottish devolved government has increased the Higher rate of tax to 42% (40% everywhere else) and the top rate to 47% (45% in the rest of the UK.)

So Scottish tax rates are now:

*Based on UK personal allowance of £12,570 and earnings that exceed £100K p.a. reduce the personal allowance by £1 for every £2 over that amount.

Does this affect you?

If you have Scottish roots, it may do – even if you now live in England (or anywhere else in the United Kingdom).

It's not as simple as just paying Scottish tax if you live and work in Scotland. According to HMRC you also may have to pay Scottish income tax:

• If you relocate to Scotland or move away from Scotland or if you live in England and work in Scotland – or vice versa – you pay tax based on where you live, NOT on where your employer is located. So, if you live in Scotland and work from home for an English employer, you will still pay tax at the Scottish rate.
• If you have a family home in Scotland and another home anywhere else in the UK, you may also have to pay Scottish income tax. So if your partner and children have stayed in Scotland and you have another house or flat in the UK where you stay during the week while working for an English employer, you are still counted as living in Scotland – and, therefore, must pay tax at the Scottish rate.
  If you have two homes technically your main residence is where you spend most of your time, but if you work in one tax domain and have a home in the other, it follows that you probably spend more time wherever you work. However, HMRC will look at where most of your possessions are located, where your bank account is based, where you're registered with a GP, where your family lives and whether you are a member of local clubs and societies to determine where your main residence actually is.
• If you stay in Scotland regularly – in hotels or offshore – you may be subject to Scottish income tax.

Make sure your employer is using the correct tax code so you're not paying more than you should – or find yourself with a back-dated surplus to pay. The simple way to check is to look at your tax code – Scottish tax codes start with an S.