Are you a Scottish Taxpayer for payroll purposes?

17 March 2017

The 2017/2018 tax year will see the United Kingdom introduce a variance between Scottish Rate taxpayers and the rest of the UK.

The Scottish Rate of Income tax was first introduced in 2015/2016 where a fraction of Scottish spending had been subsidised by revenues from land, buildings transaction tax and Scottish landfill tax.  From 6 April 2016, the Scottish Parliament were able to fix the Scottish Rate of income tax with power delivered by the Scotland Act 2012.

For an individual to be a Scottish taxpayer, they must firstly be a UK resident for tax purposes.  The location of which country their tax will contribute to will depend on the individual’s main place of residence. An individual who meets the classification of a Scottish taxpayer will remain a Scottish taxpayer for a complete tax year.  For example, if an individual has more than one place of residence in the UK, the individual will continue to pay tax in the same part of the UK they have the closest association to, even if they move within the UK in that tax year.

To identify whether an individual is a Scottish taxpayer, the following is relevant:

  • It is where they live and not where they work. For example, if someone lives in Edinburgh but commutes to Newcastle for work then they would be a Scottish taxpayer because Edinburgh is their hometown.
  • If HMRC hold a Scottish address for an individual in their system. It is important to always notify HMRC of a change of address. This is NOT be the employer’s responsibility and a change of address notification via RTI will not update HMRC’s system.

Scottish taxpayers are defined by the ‘S’ prefix at the start of their tax code, for example – an employee in England would have the tax code of 1150L and an employee in Scotland would have the equivalent tax code of S1150L.

From April 2017, the Scottish Government can now set the rates and thresholds for basic, higher and additional tax bands individually. As a result, all Scottish taxpayers will pay higher rate tax earlier than the rest of the UK at a cost of £400 per year (£45,000 - £43,000 @ 20%). 

Please see below tables detailing the difference in thresholds for Scotland and the rest of the UK:

Rate %


Rest of the UK

Basic 20%

£0 – £31,500

£0 – £33,500

Additional 40%

£31,501 - £150,000

£33,501 - £150,000

Additional Rate 45%

Over £150,000

Over £150,000

Higher Rate Threshold




If you require any further information or have any questions regarding Scottish Rate of Income tax, please contact or your usual AAB contact.

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