RegulationBusiness RegulationAdvisers warn of employer headache as Scots income tax looms

Advisers warn of employer headache as Scots income tax looms

Payroll IT and processes need yet another update, as Scottish income tax rates will come into force from April 2016, warn advisers

Advisers warn of employer headache as Scots income tax looms

HAVE YOUR corporate clients set up payroll to deal with the impending Scottish rate of income tax? The question is one that advisers must broach with their clients, their accounting peers have warned.

The new rates, which will apply to workers that live in Scotland, will be proposed later this month and apply from 6 April 2016.

While the onus is on HMRC and employees to decide the appropriate tax jurisdiction, employers will need to make sure their payroll software is in order to deal with the change. The taxman will let them know who the Scottish taxpayers will be – and an ‘S’ will be added to the start of their tax code.

Various forms and payslip will need amending, while HMRC’s employer guidance states: “You’ll need to adjust your IT systems to collect the right amount.”

RSM’s head of tax in Scotland, Stephen Hay, has warned that the change will place “important administrative burdens” upon employers.

“All employers with Scottish resident employees – or even a single worker living in Scotland – will still need to be set up to deal with the new regime and have payroll software which can cope with the new codes,” said Hay.

“It is also likely that employers will have to respond to queries from their staff, and deal with the inevitable teething difficulties that the introduction of the new rate will bring – particularly in the event that the Scottish government decides to raise or lower the rate.”

There have been concerns about the Scottish government’s ability to manage the transfer of control.

Related Articles

Five key tax and business burdens the chancellor must ease in Autumn Statement

Business Regulation Five key tax and business burdens the chancellor must ease in Autumn Statement

10m Kevin Reed, Writer
Leader: George too comfy in flip-flops

Business Regulation Leader: George too comfy in flip-flops

5y Kevin Reed, Writer
Leader: Cool-off needed to stop hot pasty tax repeat

Business Regulation Leader: Cool-off needed to stop hot pasty tax repeat

5y Kevin Reed, Writer
New tax tactics, or 'same old' for HMRC?

Business Regulation New tax tactics, or 'same old' for HMRC?

6y John Cassidy
Government must stop the SME accounting tug-of-war

Accounting Firms Government must stop the SME accounting tug-of-war

6y Elaine Clark
Government wants better tax impact discussions

Business Regulation Government wants better tax impact discussions

7y our parliamentary correspondent