Am I a Scottish Tax Payer?
I know it sounds like a daft question, but it is not that obvious as you could live in England and work in Scotland, or live in Scotland and work in England. So where do you pay your taxes?
The simple answer is: if you live in Scotland, then you are a Scottish taxpayer irrespective of where you work. The taxpayer status applies to the whole of the tax year, and the rules state you cannot be a Scottish taxpayer for part of the year and a non-Scottish UK taxpayer for the other part.
If you live outside of Scotland but work inside of Scotland, that does not make you a Scottish taxpayer, as it is based on where you live.
For a PAYE person, HMRC will make that determination and your tax code will have an S on it.
However, for the self-employed, it is your responsibility to decide if you are a Scottish taxpayer or not.
Now, if you moved into Scotland or out of Scotland, then you need to look at where your main residence has been in the tax year, and if you’ve been resident for more days in Scotland for the tax year, then you are deemed a Scottish resident and a Scottish taxpayer. It’s also vice versa if you spend most of your time in England, Wales, or Northern Ireland, then you would be deemed a non-Scottish taxpayer. So you might have to count your days of where you are residing, and you count a day from midnight at the end of that day.
The complication comes is if you have two or more homes at the same time. Then you have to establish where your main residence or main home is. You look at where you live, or spend most of your time. It doesn’t matter if you own the home, if you rent it, or you live in it free of charge. Woo-hoo.
But there is a but. Isn’t there always? If you have two places to live, e.g., a home, a family, and your social life in Edinburgh, but you work in London for most of the time and you rent a flat in London, you may work more days in London than you are residing in Edinburgh, but that does not necessarily make you a non-Scottish taxpayer. You look at where your life is carried out. If your immediate family is in a family home in Scotland, you spend most of your social life there, your doctor and dentist is there, that then puts you as a Scottish taxpayer. A Scottish taxpayer therefore has to pay tax based on the Scottish rules, which are 19%, 20%, 21%, 41%, and 46%.
Wales started this idea of a Welsh Tax resident from tax year 2019/20 and they follow the same rules based on where you reside. At the moment, they have the same income rates and tax rates as England and Northern Ireland.
So there you go. That is how you determine if you are a Scottish taxpayer. There is already a button to press to tell HMRC where you are tax resident, and when you start the 19/20 tax return, Wales will be an additional option.