The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Lynne Gowers on 12th October 2016
The Scottish Rate of Income Tax (SRIT) came into play from April 2016 as part of the devolved powers transferred to the Scottish Parliament.
If your primary residence is in Scotland, or you live there for more than six months of the year, you are considered a Scottish taxpayer and a portion of your income tax is paid to the Scottish Government.
You will have an “S” prefix on your tax code and this will be applied to all of your taxable income, including wages and pension under PAYE. If you are a Scottish taxpayer and get the standard Personal Allowance of £11,000, your tax code for the 2016/17 tax year is likely to be S1100L.
The Scottish tax rate is currently 10% but overall you will pay the same amount as taxpayers in the rest of the UK, whatever income band you fall into. It just means that 10p in every pound of the income tax you pay goes into the Scottish system.
Because this rate is determined by the Scottish Government, there is the potential for it to change in future tax years.
HMRC have a table of how your total rate as a Scottish taxpayer is allocated.
If you move to or from Scotland you need to tell HMRC as soon as possible. They will adjust your tax code and backdate your new rate to the start of the tax year.
If you complete a self assessment tax return, you will be asked to tick a box to to tell HMRC that you pay the Scottish rate of tax.
Need a hand with self assessment? Find out more about our easy online tax return service
Our guide to closing your business explores some of the options for closing or suspending a limited company
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