Scotland Act 2012 is coming down the Tartan track anyway…who knew!

Post referendum we’re still on a bit of a roller coaster ride. As we now know it was a No vote, but there were changes in place with regards to the Scottish Rate of Income tax through the Scotland Act 2012 which many appear to have overlooked.

The big unknown remains the rate that will ultimately be set by the Scottish Government, but this should not stop employers across the UK thinking about how this will impact them. It’s better to be on the front foot rather than reactive, especially when it comes to employee communications.

HMRC have already indicated that they are going to write to taxpayers they believe to be Scottish Taxpayers based on their main residence next year. This will initially be determined by the address on their system - and we can expect that there will be many addresses that will be out of date. What about those who have given an address elsewhere such as a c/o address which may not be their main residence? One thing that employers can expect is a flurry of questions from concerned employees.

We can only hope for further clarity and fast. The Smith Commission shares its findings at the end of November, with draft legislation ready for you to read while you have haggis on Burns Night. Given the tight time frame one must question whether its findings will answer all of our questions.

As a HR team you don't want to be just a passenger on this journey. A higher tax rate in Scotland may result in increased pay rise demands from Scottish staff, or even in some cases requests to move to England. Business travel between England and Scotland may throw up some challenging employer obligations as the two income tax systems diverge.

You need to anticipate and be ready to answer questions from the business as well as your workforce both North and South of the border. On your immediate shopping list should be employees confirming their main address, and knowing who works in Scotland versus the rest of the UK especially if they live the other side of the border.

One thing is for sure - the income tax system in the UK is about to go through a revolution, or should that be devolution?!

If you have any queries on some of the issues raised in this article, please contact me at:

[email protected]

We'd be delighted if you could join us at our seminar 'Scotland - HR and the no vote' - London event on Thursday 6 November. Register here for this event.