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Tax in Scotland

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Wondering if you have to pay tax in Scotland and at what rate? Find out in this article.

When moving to Scotland, tax will probably be one of your main concerns, whether you are going to work or you have retired. In all cases, you will have to pay income tax, as well as other types of taxes such as value added tax (VAT).

Taxable income

The following are classified as taxable income:

  • wages
  • income and profits from your commercial activities if you are an entrepreneur, including online sales and via mobile applications
  • savings products
  • most pensions, including those paid by the state and the society, personal pensions and retirement annuities
  • interest on stock exchange investments and shares
  • rental income (unless you do not benefit from your property and you were receiving less than £ 4,250 pounds)
  • income earned from a trust (private company)
  • dividends on company shares.

The following are exempt from tax:

  • income from tax-exempt accounts, such as Individual Savings Accounts (ISAs) and national savings certificates
  • some government benefits
  • National Lottery profits
  • the first £ 4,250 received on renting a room in your house.

Tax rates

Tax in Scotland applies at different rates as follows:

  • between £ 0 and £ 31,785 – 20%
  • between £ 31,786 and £ 150,000 – 40%
  • over £ 150,000 – 45%.

Registration

Upon your arrival in Scotland, you have to register at the nearest HM Revenue and Customs office to your place of residence. Make sure to check whether Scotland has signed any non double-taxation agreement with your home country as well.

Income tax

Income tax is deducted at source in Scotland. Therefore, you do not have to calculate the amount to be paid. Indeed, the United Kingdom applies the Pay As You Earn (PAYE) system according to which employers calculate the amount of tax to be deducted according to your income.

As regards those receiving income from several employers or from abroad while living in Scotland, they have to file a tax return form.

Other taxes

Other tax also apply in Scotland.

Value added tax (VAT) for instance, applies at a rate of 20%.

Local taxes, known as Council Tax, are paid to the municipality for common expenses.

 Useful links:

Expat.com – Scotland Forum 
The Scottish Government www.gov.scot/Topics/Government
HM Revenue And Customs www.gov.uk/government/organisations
HM Revenue And Customs – Tax calculator stccalculator.hmrc.gov.uk

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