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HMRC preparing to issue tax codes beginning with an S.

The Scottish government will publish its Budget on 16 December 2015. It will include proposals for the Scottish rate of income tax, which would apply from April 2016.

What is the impact?

Whether or not a person is a Scottish taxpayer is based on where they live and not where they are employed. It is an individual’s responsibility – not an employer’s – to make sure HMRC has details of their main residence.

In early December HMRC began writing to 2m people who pay tax under PAYE and 600,000 who file a self assessment return. Unfortunately this SA return figure includes many businesses, including those under CIS, which will confirm where they reside in future tax returns. Employees will need to consider their residence and correct any address error.

Employees will receive a tax code if they are resident in Scotland and the indication is that the code will begin with an S. Employers should only use the ‘S’ prefix when they are in receipt of the tax notification.

Article contributed by ACCA In-Practice