TT305: SCOTS AND WELSH TAX CODES ISSUES

November 01, 2019

HMRC have admitted that a number of workers in Scotland and Wales have paid the wrong amount of income tax due to incorrect tax coding notices issued by them.  HMRC have not disclosed how many workers were affected by the mix up of tax codes which are used to identify where people live.

In April 2019 the Welsh rates of income tax were introduced. The tax code which should be used for Welsh residents should start with a letter “C”.  HMRC have confirmed that there are cases where employers have used an “S” code (S for Scotland) rather than a “C” code which meant that some employees have paid too much tax and others have not paid enough tax.   Employees in Wales earning £12,502 to £14,549 would have under paid tax as the Scottish rate is 19% whilst in Wales it is 20%.   The good news is the band of income between £14,549 and £24,944 would have been taxed correctly at 20%.  The band of income between £24,945 to £43,430 would have been over taxed by 1%.   Those employees in Wales earning £43,431 to £50,000 taxed as Scottish would have over paid tax by 21% on that band of income. Income in excess of £50,000 would have been over taxed by 1%.

HMRC pointed out that it is the responsibility of the employer to apply the tax code provided by HMRC and they claim to be working closely with employers affected providing support as they investigate and attempt to correct the problem.

Earlier in the year, HMRC were forced to admit that it had failed to treat around one third of members of the Scottish Parliament (MSPs) as Scottish taxpayers, even though the legislation that introduced the devolved income tax specifically confirms that all MSPs and Scottish MEPs and Scottish MPs should be treated as Scottish taxpayers by default.  Utilising the 2019/20 basic code for clarification purposes, tax codes should take the format of the following: –

 

English tax code         –           1250L

Scottish tax code         –           S1250L

Welsh tax code           –           C1250L

 

If an employee has a Scottish or Welsh tax code but thinks that they should not have Scottish / Welsh tax applied they should contact HMRC themselves by telephone on 0300 200 3300 so that they can persuade HMRC to issue an amended tax code.

 

 

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