David Heaton, employment tax expert, casts an expert eye over the latest employment tax issues including a warning about PAYE challenges on Scottish Rate of Income Tax (SRIT), changes to HMRC telephone numbers as 0845 numbers are dumped, abuse of employment allowance and childcare vouchers
PAYE warning on Scottish Rate of Income Tax (SRIT)
The Scotland Act 2012 will introduce the Scottish rate of income tax (SRIT) from April 2016, which will require new PAYE codes for ‘Scottish taxpayers’. HMRC will use its National Insurance and PAYE Service database, updated with address information from the first Full Payment Submission for every new starter, to determine whether a worker is a Scottish taxpayer and issue a code with an S-prefix in early 2016. The change will affect employers throughout the UK (and some overseas), not just those in Scotland, so payroll software will need to recognise the changed rules.
As HMRC points out in guidance published on 11 June 2015 (www.gov.uk/scotland-act-2012), for the vast majority of individuals, it will be easy to determine whether they are Scottish taxpayers. The decision is based on where a UK-resident individual lives, or resides, in the course of the tax year, rather than where the individual works, or where the fund paying his or her pension is based.
