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HMRC have confirmed that taxpayers in Scotland with benefit from an income tax break on their pensions at the local rate.
The announcement follows work between the department and pensions industry to identify ways to deliver Scottish basic rate relief through the relief-at-source (RAS) process.
The Scottish rate of income tax (SRIT) is expected to be implemented in April 2016, after being introduced in the Scotland Act 2012.
HMRC have confirmed that taxpayers in Scotland with benefit from an income tax break on their pensions at the local rate.
The announcement follows work between the department and pensions industry to identify ways to deliver Scottish basic rate relief through the relief-at-source (RAS) process.
The Scottish rate of income tax (SRIT) is expected to be implemented in April 2016, after being introduced in the Scotland Act 2012.
A technical note from the Revenue in May 2012 clarified the scope of the SRIT and how it would interact with the rest of the UK income tax system.
Scottish taxpayers who pay contributions to their employer’s pension scheme under the net pay arrangement will automatically receive relief on their contributions at the local rate – but the RAS set-up will not automatically provide the correct tax break.
The pensions industry could be required to change their systems to be able to claim relief at the Scottish basic rate: they will have to differentiate between local taxpayers and those in the rest of the UK, and then make claims appropriately.
HMRC will provide information to scheme administrators to allow them to identify which members are Scottish.
The government expects the pensions industry to be ready to make RAS claims at the Scottish basic rate from April 2018, until when scheme administrators will be allowed to claim relief at the UK basic rate for all members.
The Revenue will identify Scottish taxpayers and make any adjustment to the relief through the self assessment process or PAYE coding.
