The SRIT, which applies from 6 April, is based on where people live, not where they work. So if you are a UK resident for tax purposes and your main residence is in Scotland, you are a Scottish taxpayer.
The 2016/17 tax codes that HMRC is now sending out should reflect the new status by including the ‘S’ prefix where the individual is classed as a Scottish taxpayer. But several accountants have reported that some clients living and working in Scotland are receiving new tax codes that don’t have the required prefix.
There are also instances of non-Scottish taxpayers being given the new code incorrectly, said John Cairns, partner at French Duncan. One of the firm’s clients, who lives in London but whose correspondence goes to a family home in Scotland, received a letter from HMRC telling her she was a Scottish taxpayer.
“Had the facts been the other way around then the point would never have been raised by her as it probably would not have crossed her mind. There appears therefore to be a risk of Scotland not receiving all to which it is entitled,” said Cairns.
HMRC is unlikely to be corrected by Scottish taxpayers who wrongly receive tax code without the ‘S’, he pointed out.
“The amount of tax they will pay is the same, so are they going to bother? In fact, were they concerned that the Scottish rate will rise they may be tempted to keep their heads down.”