Personal tax in Scotland - What is tax in Scotland?
For those who are self-employed or who employ others in the course of their business, having an understanding of personal taxation is hugely important.
If you live in Scotland, you pay Scottish Income Tax. This money goes to the Scottish Government.
What are the rates of income tax?
Everyone who lives permanently in Scotland pays Scottish Income Tax.
You might also have to pay it if you have moved and spent over half the tax year living in Scotland.
If you have a house in Scotland and a house somewhere else, you may be liable for paying tax in Scotland. This will depend on which is considered your main home. Your main home will be the one that you usually live at and spend the majority of your time.
You may have to pay income tax in Scotland if you don't have a home here but stay here on a regular basis. For example, you might work and stay offshore or in hotels.
How is income tax paid?
If you have an employer or receive a pension, you will have a tax code that tells your employer or pension provider the rate at which they should deduct tax from your income. Other people will pay tax by filling out a Self Assessment tax return.
PAYE is the system used by HM Revenue & Customs to collect income tax and national insurance from employers. To make this possible, employers are required to operate PAYE as part of their payroll and make deductions for tax, national insurance, student loan repayments and pensions contributions. These deductions need to be reported to HMRC on or before each payday. Payments are then made to HMRC, usually once a month.