Questions and answers about income tax regions

We recommend you get independent professional advice from a Tax Adviser if you’re unsure what to do. A Tax Adviser can make a personal recommendation based on your individual circumstances and the options available to you. If you don’t have an adviser, you can find one at www.unbiased.co.uk. You may have to pay for any advice you receive.

You can also call your local HMRC office for more information. It helps if you have your National Insurance number when you call.

1. What is my rate of income tax?

The Scottish and UK governments have the power to set their own rates and bands of income tax for their resident taxpayers. The Welsh tax rate is set by UK parliament but reduced by 10% to the rest of the UK. The Welsh Assembly then add their portion of tax to give the final tax rate.

Regional income tax is paid on earned income only. Income from savings or dividends is taxed using the UK rate.
You can find more information about income tax rates and bands at:

www.gov.scot/incometax for Scotland

www.beta.gov.wales/welsh-taxes for Wales

www.gov.uk for the rest of the UK.

2. Does it matter where my pension provider is based?

No, it doesn’t matter what part of the UK your pension provider is based in. Although ReAssure is based in England, Scottish taxpayers are subject to Scottish income tax and Welsh taxpayers are subject to Welsh income tax.

3. Who decides which tax region I am in?

HMRC decides your tax region. It generally depends on the location of your sole or main place of residence, for all or most of the tax year.

4. How will I know if I’m regarded as a Scottish, Welsh or UK taxpayer?

HMRC will write to you to tell you your tax code. If it begins in an S, then you’re a Scottish taxpayer and if it begins with a C, then you’re a Welsh taxpayer. If your tax code doesn’t have either of these letters at the start, then you’re a UK taxpayer. HMRC will send this to you, regardless of how much income you earn.

5. I live in a different tax region from where I was born. Which income tax do I pay?

Your place of birth doesn’t affect your tax region for income tax purposes. For example, if you’re Scottish but don’t reside in Scotland, you’re not usually a Scottish taxpayer. If you have a home in more than one part of the UK, HMRC will decide within which region you’re a taxpayer.

6. What tax relief will I receive on contributions to my pension and how will it be applied?

You’ll receive tax relief on your pension contributions up to the amount you earn each year. If you’ve flexibly accessed your pension savings you can contribute up to £4,000 each year and receive tax relief, known as the Money Purchase Annual Allowance (MPAA).

The amount of tax relief that your pension provider applies to your contributions, will depend on the type of pension you have.

I have a personal pension….
Your pension provider applies tax relief at the basic rate of income tax to the contributions you pay into your personal pension. If you pay income tax on your earnings at a rate higher than your basic rate, you can claim further tax relief from HM Revenue & Customs (HMRC) directly. If you pay income tax on your earnings at a rate lower than your basic rate, or you are a non-taxpayer, you won’t have to repay any tax relief to HMRC, even though tax relief is provided at your basic rate.

I have an occupational pension….
Your contributions into an occupational pension scheme are deducted from your earnings by your employer before income tax is calculated. This means you normally receive your full amount of tax relief upfront under PAYE. The amount you’ll receive will depend on the rate of income tax you pay.

7. How is tax taken from money paid out of my pension?

We will deduct income tax at UK rates unless HMRC tell us you are a Scottish or Welsh taxpayer.

This doesn’t affect any tax-free lump sums you may have been eligible for. If you were eligible for 25% tax-free before this change, then there will be no change to the 25% tax-free lump sum.

8. I am now a taxpayer in a different tax region. How will my tax relief change?

If we’ve already started to claim tax relief on your contributions to a personal pension plan as a taxpayer in your old region, we’ll continue to claim tax relief on this basis until the end of the tax year.
From the new tax year we’ll collect tax relief at the rate for your new tax region, as HMRC will have updated us with your new tax-residency information.