The Scottish rate of Income Tax came into effect from April 2016. We have put together some questions and answers that we believe will help members and pensioners assess whether they will be affected and any action they may need to take.
The Scottish rate of Income Tax was introduced in the Scotland Act 2012 and allows Scotland to set a different rate of Income Tax for Scottish residents which means that, depending on the level the Scottish Parliament sets, Scottish taxpayers may pay a different rate of Income Tax to the rest of the UK.
Some of the Income Tax collected under the Scottish rate will fund the Scottish government and the rest will fund the UK government.
The Scottish government confirms the Scottish rate of tax in the budget each year.
The Scottish rate of Income Tax doesn’t apply to income from savings such as building society interest or income from dividends. This rate will stay the same for all taxpayers across the UK.
National Insurance contributions are unaffected by the introduction of the Scottish rate of Income Tax.
The Associated British Foods Pension Scheme deducts contributions through Net Pay, which means that your contributions are deducted before any tax is calculated on your earnings. You therefore receive full tax relief at your Income Tax rate - this does mean that if your tax code changes then the rate of tax relief you are granted will also change.
HMRC will decide who is a Scottish taxpayer by looking at where you live. It's therefore really important that you tell HMRC if you have moved house so that you are correctly assessed.
If you move to or from Scotland, have more than one home, or don’t have a home, you’ll need to work out if you’re a Scottish taxpayer.
It’s your responsibility (not your employers’) to notify HMRC if you change your address.
Group Pensions will help you as much as they can, but as this is to do with tax rate changes, most queries would need to be referred to HMRC.
There is a lot of information available on the HMRC website and we've listed some of the useful links below:
HMRC News article - published September 2015
HMRC website - Scottish rate income tax
How to tell HMRC if you have moved address
You can also call or write to HMRC, please click here to be taken to their contact page.