A Scottish inevitability


The Scottish Rate of Income Tax (SRIT) will come into effect on April 6th 2016 and, depending on the rate at which it is set, it could have a real impact on whether Scotland becomes more or less attractive as a place to work.

So will you be a Scottish taxpayer and do you want to be a Scottish taxpayer?

A Scottish Taxpayer

Draft guidance has recently been published by HMRC detailing how they will determine if you are a Scottish taxpayer. First and foremost you must be a UK resident for tax purposes then you must meet one of the following three conditions:

  1. You are a member of the Scottish parliament
  2. You have a ‘close connection’ with Scotland
  3. If you have no ‘close connection’ then you spend more days in the tax year in Scotland than in any other part of the UK.

A ‘close connection’ with Scotland means you have only one residence and that residence is in Scotland. If you have more than one residence, one of which is not in Scotland, then it will be necessary to establish which residence is your main residence.

SRIT will apply to non-savings income.

The way it will work is the current UK income tax levels will be reduced by ten per cent for all those living in Scotland. Then there will be a Scottish tax added back – if this is lower than 10% then there will be tax saving for Scottish taxpayers – and vice versa if it is more than 10%.

So the new tax rate may attract more people to work here , or if set above 10% the converse may apply.


If that student has a job here to help fund their studies and, therefore, does not travel home in between terms, then they will most likely be considered a Scottish taxpayer. So will this influence students in coming to study in Scotland?


Employers need to be prepared to apply the SRIT through their payroll. This will be effected by the issue of appropriate PAYE codes.


The Scottish Rate of Income Tax, together with changes to the taxation of dividends ( see previous blog) will make a big difference for many people and for some, where they call home

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