The Scottish Parliament has set the income tax rates and bands that will apply to the relevant income of Scottish taxpayers for 2018/2019
The Scottish income tax rates and bands for 2018/2019 were confirmed on 20 February. This followed the minority SNP administration reaching an agreement with the Scottish Green Party, which saw a small change made to the higher rate threshold for Scottish taxpayers proposed in December last year. It was also announced that the UK Government will ensure that starter and intermediate rate Scottish taxpayers continue to qualify for Marriage Allowance from 6 April 2018, and potential issues with how the new Scottish regime will interact with the rules for pension relief are resolved. Full details of these proposed legislative changes have yet to be announced. Individual taxpayers and employers should now consider what the Scottish income tax changes from 6 April 2018 will mean for them in practical terms.
HMRC published a new edition of their Pension Schemes Relief at Source for Scottish Income Tax Newsletter on 21 February.
This confirms that pension scheme administrators operating relief at source will claim income tax relief at 20 percent for all Scottish taxpayers for 2018/2019.Starter rate (19 percent) taxpayers will not be required to repay the difference between the income tax relief given at source and their marginal rate of income tax.
Intermediate rate (21 percent) taxpayers will be required to make a claim for additional income tax relief in the same way as higher and top rate taxpayers (via self-assessment or a PAYE coding adjustment). HMRC have announced that they will engage with stakeholders to assist these individuals, who are unlikely to have been required to make a claim for relief in earlier years.
HMRC will publish further guidance in future newsletters on other implications for pensions of the new Scottish income tax rates and bands.
For more on the Scottish Rate Resolution for 2018/2019 and its implications, please see our dedicated webpage.
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