With less than a year until Scotland takes responsibility for setting income tax rates for Scottish residents, HMRC has released draft technical guidance on how Scottish taxpayer status should be decided, highlighting complications over residency issues with the proposed Scottish Rate of Income Tax (SRIT), particularly for taxpayers who work in both Edinburgh and London, armed forces personnel and for highly mobile employees
From April 2016, the Scottish parliament will set its own Scottish rate of income tax (SRIT) under the Scotland Act 2012 and will be able to alter rates by up to 10% versus the UK national rate.
However, the new tax framework will create complications for employers with complex residency issues for some employees.
The long-awaited HMRC guidance has now been released and is out for consultation until 31 July 2015.
HMRC states that ‘for the vast majority of individuals, the question of whether or not they are a Scottish taxpayer will be a simple one – they will either live in Scotland and thus be a Scottish taxpayer or live elsewhere in the UK and not be a Scottish taxpayer’.
However, many tax advisers and employment tax specialists have warned that the new rules will be open to interpretation, particularly for highly mobile workers or those who travel extensively for work, but live in different nations, ie, London and Edinburgh.
