Scotland or England tax rules?
So you may think this is a dumb questions, but how do you know if you are to be treated as an England tax resident or a Scottish tax resident?
As the rates and thresholds are different, being a Scottish resident may look more favourable tax-wise, to the lower income creative person, it soon swaps around the higher up the income level to be paying less tax in England.
What then determines if you are a Scottish tax payer or an English tax payer?
At the moment, the tax system applicable to you depends on your place of residence, not your place of work. This means if you live in Scotland for more than half the year, you will generally be considered a Scottish taxpayer and hence would fall under the Scottish tax system, even if you work or perform in other parts of the UK.
You could work at Scottish Opera in Glasgow and live in Carlise and be treated as an English tax resident. I don’t think I would want to travel for nearly 2 hours a day if I was in the Scottish opera orchestra.
A Scottish tax payer will have a tax code prefixed with an S (Wales is prefixed with a C if you are interested). It is only income tax that is devolved to the individual nations, not national insurance, capital gain tax or inheritance tax.
It is therefore vital to keep your address up to date with HMRC to ensure that you are paying the correct amount of tax. There is an article in our knowledge base showing how to do this; https://bit.ly/3WM9iBJ
In looking at the tax rates and an example of a person earning £30,000
England (% Rest of UK):
Personal Allowance: Up to £12,570 – 0% tax
Basic rate: £12,571 to £50,270 – 20% tax
Higher rate: £50,271 to £125,140 – 40% tax
Additional rate: Over £125,141 – 45% tax
Scotland:
Personal Allowance: Up to £12,570 – 0% tax
Starter rate: £12,571 to £14,732 – 19% tax
Basic rate: £14,733 to £25,688 – 20% tax
Intermediate rate: £25,689 to £43,662 – 21% tax
Higher rate: £43,663 to £125,140 – 41% tax
Top rate: Over £125,141- 46% tax
A Quick Example:
In England (and the rest of the UK, the person would earn:
£17,430 (after personal allowance) * 20% (Basic rate) = £3,486
In Scotland:
£12,571 to £14,723 (Starter rate) = £2,162 * 19% = £410.78
£14,732 to £25,688 (Basic rate) = £10,956 * 20% = £2,191.20
£25,388 to £30,000 (Intermediate rate) = £4,312 * 21% = £905.52
This totals £3507.50
If the taxable income before personal allowances was £40,000 the Scottish tax payer will pay £5607.50 and the rest of the UK will be £5486.
But at £20000 taxable income before personal allowances was £20,000 the Scottish tax payer will pay £1464.38 and the rest of the UK will be £1486.00.
Further information:
If you need any further help and support then please don’t hesitate to contact me on 01344 585354 or email info@performanceaccountancy.co.uk
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