New Scotland tax rates may be bad for employers, say advisors
- 8th December 2015
- Accountancy & Finance
The new rates of income tax for those living in Scotland will apply from 6 April 2016, and their introduction will cause headaches for businesses, say financial advisors.
Corporate clients need to adapt their payroll procedures to deal with the changes, and many are still unsure of exactly what is in store.
HM Revenue and Customs (HMRC) and employees will be deciding the appropriate tax jurisdiction, i.e. whether or not a worker is domiciled in Scotland, but employers will need to ensure payroll software capable of dealing with the new changes.
Amendments will need to be made to various forms and payslips, and HMRC's employer guidance tells employers: "You'll need to adjust your IT systems to collect the right amount."
An ‘S' will be added to the start of the tax code for anyone who is affected by the change to the taxation of their income.
Stephen Hay, head of tax in Scotland for accountancy firm RSM, explained: "All employers with Scottish resident employees - or even a single worker living in Scotland - will still need to be set up to deal with the new regime and have payroll software which can cope with the new codes."
"It is also likely that employers will have to respond to queries from their staff, and deal with the inevitable teething difficulties that the introduction of the new rate will bring - particularly in the event that the Scottish government decides to raise or lower the rate," Hay added.
According to a recent article by The Guardian earlier this month, the Association of Chartered Certified Accountants (ACCA) and the…
We’re excited to announce that from Tuesday 1 September, our doors will be reopening to students, and we have put…