Scottish income tax

Updated on 18 May 2019

Armed forces

This section tells you about the Scottish income tax as it affects individuals employed in the armed forces. There is more general information about the Scottish income tax, devolution and Scottish taxpayers in the tax basics section.

While Scottish income tax will apply to your armed forces income in the first instance, if you are a Scottish taxpayer, a retrospective payment will be made after the end of the tax year to ensure you pay no more income tax than other UK personnel. Details have not yet been provided but you can read the commitment on GOV.UK.

Scottish income tax is not a separate tax, nor is it a devolved tax as such.

It is a power that the Scottish Parliament has to affect the amount of income tax that Scottish taxpayers pay. To do this, the Scottish Parliament can set Scottish rates and bands (of income tax), which determine the rates of income tax payable by Scottish taxpayers on certain types of income.

Since Scottish income tax is not a separate tax, but part of the UK income tax system, HMRC administer and collect it, using the Pay As You Earn (PAYE) and Self Assessment systems.

Scottish income tax has applied since 6 April 2017. The Scottish Government announces the rate and bands in its draft Budget, which is published between October and December each year. The rates and bands for 2018/19 are set out in the tax basics section.

Broadly, Scottish income tax is payable by “Scottish taxpayers”, on their non-savings and non-dividend income.

How does Scottish income tax work?

There is information on how the Scottish income tax works, including what types of income it affects, in the tax basics section.

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Do I have to pay Scottish income tax?

Scottish income tax applies to “Scottish taxpayers”. We provide information on the general rules that determine who is a Scottish taxpayer in the tax basics section.

In addition, however, there are special rules for individuals who are employed in the armed forces.

The special rules determine how the definition of a “place of residence” applies to service personnel, and in particular to service-provided accommodation, accommodation on board Royal Navy vessels and temporary accommodation occupied during operational deployments. 

The special rules have been published by the Ministry of Defence following a Freedom of Information request, and are available on GOV.UK. These rules relate to the Scottish Rate of Income Tax (which applied in 2016/17, before Scottish income tax was introduced). However, the rules to determine who is a Scottish taxpayer for Scottish income tax for 2017/18 onwards are the same. The Annex includes a number of examples to show how the rules may apply in practice.

You should consider both the general rules covered in the tax basics section and the special rules in the Ministry of Defence guidance.

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What is devolution?

There is information about devolution in the tax basics section

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