HMRC Publishes Guidance On Identifying Scottish Taxpayers
UK tax authority HM Revenue and Customs (HMRC) has published guidance on who will be considered a Scottish taxpayer when the Scottish Rate of Income Tax (SRIT) enters into effect in April 2016.
From April 1, 2016, the Scottish Parliament will have responsibility for a SRIT. Parliament will be able to set the thresholds and rates of income tax in Scotland. It is expected that the Scottish Finance Minister will announce the thresholds and rates as part of the Budget later this year. Depending on the level Parliament sets the rate at, Scottish taxpayers may pay a different rate of income tax to the rest of the UK.
In order for an individual to be a Scottish taxpayer, they must be a UK resident for tax purposes. An individual who is not UK tax resident cannot be a Scottish taxpayer. From April 6, 2016, Scottish taxpayers’ tax codes will start with an “S.”
According to a new HMRC brief, the definition of a “Scottish taxpayer” generally focuses on the question of whether they have a “close connection” with Scotland or elsewhere in the UK. The existence of that “close connection” will usually be determined by where an individual has their place of residence in the course of a tax year.
Where an individual has more than one “place of residence,” they will be considered a Scottish taxpayer if their “main place of residence” is in Scotland for at least as much of the tax year as it has been in any other country in the UK. Where no “close connection” to Scotland or any other part of the UK exists, residence will be determined through day counting.