New Scottish Income Tax Powers from 2017-18

23 December 2016

HMRC’s Software Developers Support Team (SDST) has provided an update about some changes they will be making as a result of new Scottish Income Tax Powers for the 2017-18 tax year.

The Scottish Parliament already have the ability to vary income tax rates for Scottish taxpayers, they exercised this power for the first time in February this year, choosing to keep tax rates the same as those elsewhere in the UK.

From 6th April 2017 the Scottish Parliament will have further powers which provide them with full freedom to set the income tax rates and thresholds for Scottish taxpayers. This will allow the Scottish Parliament to set whatever tax thresholds and percentage rates it wishes, (including a zero rate band). A Scottish basic rate however has to be set.

As now, HMRC will administer Scottish Income Tax Powers as part of the UK Income tax system, through PAYE and SA and the new powers only apply to earned income, income from pensions, other non-savings and non-dividend sources.

HMRC are implementing changes to their IT systems in readiness for 6 April 2017.

Read SDST’s Power Point presentation for full details.