HMRC has now published a technical note detailing the way it will deal with Income Tax in Scotland after the Scotland Bill received Royal Assent earlier this year.
As from April 2016, the Scottish Parliament will be able to set the income tax for Scottish taxpayers. The Act also allows new taxes to be created, and additional ones devolved, north of the border.
HMRC will peg the income tax rate at 10% below the rate in the rest of the UK. This means that a Scottish rate of 10% will equal the current rate, but if it is above or below 10%, Scottish taxpayers will pay a different rate to the rest of the UK.
In order to be classed as Scottish for income tax purposes, a taxpayer must have their primary residence in Scotland. This is simple enough for people with just one home, but if they have more than one residence it will be determined on where they have spent the most time in the relevant tax year.
It sounds simple enough, but such a system could be open to abuse. Obviously if the Scottish rate is set lower than that in the rest of the UK, taxpayers will be happy to have their main residence north of the border. But what happens if it is higher, not lower?
Will thousands of Scots leave Edinburgh to go and live in border towns like Berwick to escape the higher rate of tax in Scotland?
It will be interesting to see what happens when the Scottish government does start setting its own tax rate. They may not find it is not as straightforward as they had hoped!