The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
New Scottish Income Tax Powers from 2017-18 23 December 2016
HMRC’s Software Developers Support Team (SDST) has provided an update about some changes they will be making as a result of new Scottish Income Tax Powers for the 2017-18 tax year.
The Scottish Parliament already have the ability to vary income tax rates for Scottish taxpayers, they exercised this power for the first time in February this year, choosing to keep tax rates the same as those elsewhere in the UK.
From 6th April 2017 the Scottish Parliament will have further powers which provide them with full freedom to set the income tax rates and thresholds for Scottish taxpayers. This will allow the Scottish Parliament to set whatever tax thresholds and percentage rates it wishes, (including a zero rate band). A Scottish basic rate however has to be set. As now, HMRC will administer Scottish Income Tax Powers as part of the UK Income tax system, through PAYE and SA and the new powers only apply to earned income, income from pensions, other non-savings and non-dividend sources.
HMRC are implementing changes to their IT systems in readiness for 6 April 2017.
Read SDST’s Power Point presentation for full details.
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Payroll Test Data 2017-18 4 January 2017
HMRC’s Software Developers Support Team (SDST) has provided test data for Scottish tax calculations using the new proposed Scottish higher rate threshold.
The Scottish Government published their draft finance Budget on 15 December which proposes that the higher rate of income tax threshold is to increase by inflation to £43,430 in 2017-18.
The draft Budget also proposes to freeze the basic rate of income tax at 20 per cent and also to freeze the higher and additional rates at 40 per cent and 45 per cent respectively.
In line with this proposed change the Scottish parameters in Appendix B of the PAYE Tax Table Routines specification will be amended as shown below:
SR1 = 10.00% SR2 = 20.00% SR3 = 40.00% SR4 = 45.00%
(Rate 1) NOT USED
(Rate 2) (Rate 3) (Rate 4) (Band 1) (Band 2) (Band 3)
SB1 = £0
SB2 = £31,930 SB3 = £118,070
SC1 = £0
(Cumulative bandwidth 1) (Cumulative bandwidth 2) (Cumulative bandwidth 3) (Cumulative Annual Tax 1) (Cumulative Annual Tax 2) (Cumulative Annual Tax 3)
SC2 = £31,930 SC3 = £150,000
SK1 = £0
SK2 = £6,386 SK3 = £53,614
G pointer Maxrate
2
50%
The SDS Team has also provided version 1.1 of their Directors NIC tests . This version has a couple of corrections from version 1.0. Details are on the Amendment Sheet tab in the spreadsheet.
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The Chartered Institute of Payroll Professionals
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