Local Tax Accountants in Scotland

Scottish income tax came into force on 6 April 2017, with a five-band structure made up of starter, intermediate, basic, higher and top tax rates. This applies to earnings, rental income, pensions and most other taxable income. However, Scottish taxpayers will continue to pay the same as the rest of the UK on dividends and savings income. 

Our local tax accountants can help you navigate these complexities and assist with reviewing Scottish Tax coding notifications, claiming additional tax relief in respect of pension contributions and advising gift aid and marriage allowance tax savings.

This is where the definition of being a Scottish taxpayer gets complicated. Apart from being a UK resident under the Statutory Residence Test for that particular tax year, you need to satisfy one of three conditions: 

• you have a close connection with Scotland 
• you don’t have a close connection with any part of the UK, but you spend more time in Scotland than in any other part of the UK
• you’re a Scottish Parliamentarian for part or all of the tax year. 

So, what does ‘a close connection’ mean? If you only have one place of residence during the tax year and you live in if for part of the year, your close connection is in that place; if it’s in Scotland, you’re a Scottish taxpayer, and if it’s not, then you aren’t.  

If you only have one place of residence but that changes during the tax year, your close connection will be wherever you live longest in that tax year. If you have more than two or more places of residence, again, it’s wherever you live longest during the tax year. That might not be in any of your places of residence; it’s the part of the UK you’re living in that counts. 

As mentioned above, there are five tax bands with increasing tax rates. The personal allowance is the same, and generally, the tax rate is 1% higher in Scotland than the rest of the UK.   

Your National Insurance contribution rates are currently in line with the rest of the UK, and if you are self-employed, you will need to pay your NI contribution through your self-assessment. 

If you make contributions to your pension, you’ll receive tax relief on them up to the amount you earn each year. If you have a personal pension, your pension provider applies tax relief at the Basic rate, so if you’re an Intermediate, Higher or Top rate taxpayer, you’ll need to claim the extra tax relief from HMRC.