TaxPersonal TaxScotland receives devolved taxation

Scotland receives devolved taxation

Scotland will have powers to set its own rate of income tax from April 2016

SCOTLAND has been granted the right to set its own rate of income tax to be administered by HM Revenue and Customs for Scottish taxpayers.

The powers come after the Scotland Act 2012 was given Royal Assent and is set to apply from April 2016. As a result, Scotland will be able to create new taxes and devolve additional taxes.

Income tax in Scotland will be administered through PAYE for employees and pensioners, with HMRC issuing tax codes in the weeks and months leading up to April 2016, identifying those who will become Scottish taxpayers. Employers will then deduct the appropriate tax, which could be higher or lower than the rates in force in the rest of the UK.

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 lax and landfill tax will cease to be imposed in Scotland.

The definition of a Scottish taxpayer is based on the location of an individual’s main place of residence, which will be further clarified by HMRC in due course.

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