Postcode mix-up sees Scots given rest of UK tax codes

Postcode mix-up sees Scots given rest of UK tax codes

Jan 17, 2024

A mix-up at HMRC saw a small group of residents of a new-build Scottish housing estate issued with the wrong tax code

Instead of being allocated Scottish tax codes, an estimated 30 home owners were allocated rest of UK (rUK) tax codes when they notified HMRC of their new address and postcode at the Midlothian estate near Edinburgh.

The coding mistake occurred due to the way the postcode was recorded which affected the new tax code and it was corrected on HMRC’s system.

The issue was quickly resolved by HMRC, which confirmed that the mistake will not have affected the amount of income tax revenue sent to the Scottish government.

HMRC tax codes are based on annualised figures which apply to estimated pay, personal allowance, tax rates and residency. People who live in Scotland pay Scottish income tax and are issued with a tax code starting with an ‘S’. This tells their employer or pension provider to deduct tax at the Scottish rate.

Any individuals affected should check their tax code is correct on their payslips. If there were overpayments, these amounts will be refunded. Scottish tax rates are different to the rest of the UK, and there are several higher rate bands of tax for earners over £43,622 as well as several lower rates.

An HMRC spokesperson said: ‘We’ve corrected the tax codes of residents from the estate and we apologise to those affected. Any overpaid or underpaid tax will be refunded or collected via PAYE as normal.

‘People can check their code on the free HMRC app and online and if they think they’re on the wrong tax code, they should tell us by using their online personal tax account.

Individuals pay Scottish income tax if they move to Scotland and live there for a longer period than anywhere else in the UK during a tax year (6 April to 5 April the following year).

If a taxpayer moves mid year from Scotland to England HMRC changes an individual’s tax rate accordingly and the new rate will be backdated to the start of the tax year (6 April) in which they moved. The tax taken from wages or pension will be adjusted automatically so that the right amount is paid across the whole year.

Scottish income tax collected by HMRC is paid yearly to the Scottish government. The latest payment for 2021-22 was £13.724bn – an increase of 14.9% compared to 2020-21