Scottish taxes - Scottish Rate of Income Tax

The Scottish Parliament has devolved powers over some tax matters.  The main taxes that individuals will encounter are the Scottish Rate of Income Tax (SRIT) and Land and Buildings Transaction Tax (LBTT).

The SRIT applies to “Scottish taxpayers” from April 2016.  This is based on having a main place of residence in Scotland.  Those individuals who are also resident in another country in the UK may therefore not be Scottish resident, or may have the ability to modify their presence in Scotland so that they fall outside the SRIT provisions.

Top tip:

It is important to note that the SRIT applies to non-savings and non-dividend income.  Owners of their own company have more flexibility in how to withdraw their earnings from the business and they would usually choose between taking salary, paying dividends, or perhaps request that the company makes a pension contribution.  Each circumstance will provide a different tax result.  Whilst the changes to dividend taxation with effect from 6 April 2016 have removed much of the tax advantage of paying dividends, this option does tend to be marginally more tax efficient.

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