Accountants living in Scotland might pay more PAYE

The Scottish Parliament has the right to set a different rate of income tax to that charged by HMRC in England. But if you are a contractor accountant living in England and working in Scotland, which tax rate will you pay?

The Scotland Bill recently confirmed that a Scottish taxpayer will be determined by his home rather than his place of work. If a person has a home in both Scotland and England, they will be subject to Scottish taxation if they spend more nights in Scotland than in any single location elsewhere in the UK.

Price Bailey partner, Matt Coward, says the definition is too simple and easy to exploit. He thinks Scotland should use the same test as proposed for UK residency.

KPMG’s employment tax director, Steve Wade, said the Bill’s stipulations are straightforward but says more clarification is needed with regards to people moving country midway through a financial year.

He explained that the Bill does not clarify what happens to PAYE if someone moved to Scotland three months into a new financial year. They would become a Scottish taxpayer but would they have to make up the difference if the income tax rate in Scotland was higher?

Meanwhile, a leading consultant claims that an Anglo-Swiss agreement for a withholding tax on UK citizens’ bank accounts is not carved in stone. An announcement had been expected in May, but there is still no sign that a deal will be agreed soon said Philip Macovici, the architect behind the Liechtenstein-UK agreement.

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