Scottish Rate of Income Tax

On 11 June 2015, HM Revenue & Customs issued draft technical guidance on the definition of a Scottish tax payer.  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 tax payers from April 2016. 

The definition of a Scottish tax payer will be focused on where an individual lives, or resides, in the course of a tax year.  For the majority of individuals, the question of whether or not they are a Scottish tax payer will be a simple one – if you live in Scotland you will be a Scottish tax payer.  If you live elsewhere in the UK you will not be a Scottish tax payer. 

However, for more complex cases, the technical guidance provides detail on the way in which HMRC will interpret the term “Scottish tax payer”.  The guidance will mainly be relevant to individuals who have more than one place of residence in the UK.  Such individuals will need to determine which of these has been their main place of residence for the longest period in a tax year.  If this is Scotland, they will be a Scottish tax payer.  For individuals who cannot identify a main place of residence, the days they spend in Scotland and elsewhere will be counted and those who spend more days in Scotland will be a Scottish tax payer.   Where an individual meets the definition of a Scottish tax payer, they will be a Scottish tax payer for the whole tax year.

The guidance explains the meaning to be assigned to “place of residence” and “main place of residence” and provides various examples.  It also encourages individuals to keep records and documents to support statements made when considering their Scottish tax payer status.

Any comments on the draft guidance must be submitted to HMRC by 31 July 2015.