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06/02/2014
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Devolved taxation in Scotland

The Scotland Act 2012 gives the Scottish Parliament the power to set a Scottish rate of income tax to be administered by HM Revenue & Customs (HMRC) for Scottish taxpayers. It is expected to apply from April 2016. The Act also fully devolves the power to raise taxes on land transactions and on waste disposal to landfill – it is expected that this will take effect in April 2015, at which point the existing Stamp Duty Land Tax and Landfill Tax will not apply in Scotland. The Act also provides powers for new taxes to be created in Scotland and for additional taxes to be devolved.

For employees and pensioners, the Income Tax change will be applied through PAYE (Pay As You Earn). HMRC will issue tax codes to employers in the months before April 2016 which will identify those employees who are Scottish taxpayers, and employers will deduct tax at the appropriate rates, which may be higher or lower than or the same as those which apply in the rest of the UK. The definition of a Scottish taxpayer is based on the location of an individual’s main place of residence – further guidance will be available on this site in due course.

Where to get more Information

HMRC Technical Note - Clarifying the scope of the Scottish Rate of Income Tax (PDF 90K)

Scotland Act 2012 (Opens new window)

Frequently Asked Questions (PDF 19K)

Other useful links

Scotland Office (Opens new window)
The Scotland Office plays an essential role in managing day to day devolution issues between Westminster and Holyrood. The Scotland Office liaises across a wide range of Whitehall departments to both promote and guard the devolution settlement, as well as having regular engagement with key stakeholders in Scotland on a broad range of issues which are reserved to Westminster.

The Scottish Parliament (Opens new window)

The Scottish Government (Opens new window)