Scottish Payroll Headache?
Have you set up payroll to deal with the impending Scottish rate of income tax? The question is one that advisers must broach with their clients, their accounting peers have warned.
The new rates, which apply to workers that live in Scotland, commence April 2016.
The onus is HMRC
While the onus is on HMRC and employees to decide the appropriate tax jurisdiction, employers will need to make sure their payroll software is in order to deal with the change. The taxman will let them know who the Scottish taxpayers will be – and an ‘S’ will be added to the start of their tax code.
Various forms and payslip will need amending, while HMRC’s employer guidance states: “You’ll need to adjust your IT systems to collect the right amount.”
RSM’s head of tax in Scotland, Stephen Hay, has warned that the change will place “important administrative burdens” upon employers.
“All employers with Scottish resident employees – or even a single worker living in Scotland – will still need to be set up to deal with the new regime and have payroll software which can cope with the new codes,” said Hay.
“It is also likely that employers will have to respond to queries from their staff, and deal with the inevitable teething difficulties that the introduction of the new rate will bring – particularly in the event that the Scottish government decides to raise or lower the rate.”
There have been concerns about the Scottish government’s ability to manage the transfer of control.
Article taken from Accountancy Age
Author: Kevin Reed
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Carl Ford is the founder of Honey Bee Accountancy. Carl has extension knowledge of the retail and recruitment sectors which is utilised to help grow successful businesses for the clients of Honey Bee Accountancy.