One of the things puzzling software developers and employers was the implementation of the Scottish Income Tax thresholds for 2020/21 – note that there are no changes to the Scottish Income Tax rates.

The thresholds were confirmed in the Scottish Rate Resolution (SRR) on 04 March 2020 as follows (compared to those that applied in 2019/20):

Band 2019/20 Rate 2020/21 Rate Change
£ % £ % £
Scottish Starter 12,501 – 14,549 19 12,501 – 14,585 19 +36
Scottish Basic 14,550 – 24,944 20 14,586 – 25,158 20 +178
Scottish Intermediate 24,945 – 43,430 21 25,159 – 43,430 21 -214
Scottish Higher 43,431 – 150,000 41 43,431 – 150,000 41 0
Scottish Top Over 150,000 46 Over 150,000 46 0

Therefore, the above have been in legislation since the SRR was ratified.

Although, we knew the proposed rates and thresholds beforehand as a result of the draft Budget at the start of February.  Further, we knew that they would be ratified in Scotland as a result of the Scottish National Party’s coalition Budget agreement with the Scottish Greens.  Confusingly, they were not included or acknowledged in HMRC’s notification to software developers on 25 February 2020 about the thresholds to use for 2020/21.  Nor was there any follow-up E-Mail recognising that Scotland had even had a Budget.

Therefore, despite the fact the Scottish Income Tax regime is in legislation, software products will probably start the tax year with the 2019/20 rates and thresholds.  Rates is not an issue, as these have not changed.  Thresholds is an issue.

And the implementation date is….

On 17 March 2020, HMRC’s Software Developer Support team (SDST) advised the following:

  • Although the rates and thresholds have been in legislation since the start of March, HMRC will implement them on the first payday that falls on or after 11 May 2020
  • They will be backdated to 06 April 2020, assuming that someone is on a cumulative tax code (though no tax codes will be issued until 11 May 2020 anyway)
  • If changes are required to the tax code as a result of the updated thresholds, HMRC will issue P6 (in-year) tax code notifications from 11 May 2020
  • All HMRC guidance, products and tools will be updated with these new thresholds from 11 May 2020.

In short, please do not be confused if software products do not implement the 2020/21 Scottish Taxpayer thresholds from the start of the new tax year.

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