From 6 April 2017 the Scottish Parliament will set the Income Tax rates and limits that apply to the non-savings and non-dividend income of Scottish taxpayers. HMRC has published a technical note which sets out the manner in which Scottish Income Rates and limits will interact with various aspects of the wide Income Tax regime.

Scottish income tax powers have implications for a number of areas of income tax, particularly those which reference specific rates of income tax, the vast majority of which are to references to basic rate.

The Scotland Act 2016 requires the Scottish Parliament to maintain a Scottish basic rate and all areas of income tax legislation which reference basic rate have already been amended, to include Scottish basic rate, to facilitate the Scottish rate of income tax. No further consequential amendment is therefore required to accommodate Scotland Act 2016.

The remaining areas of income tax for which further Scottish income tax powers have implications are mainly therefore those which reference rates of tax other than the basic rate. In such cases consequential amendment is required to ensure the continuing unchanged operation of such areas (for example Gift Aid and relief at source pensions) should the Scottish Parliament choose to move away from the basic, higher, additional rate band structure that currently applies in the UK.

Regulations giving effect to these consequential amendments will be made prior to the start of the 2017/18 tax year.

Regulation 10 amends section 414 of the Income Tax 2007 (c. 3) which deals with relief for gifts to charity. In the case of a Scottish taxpayer who has made a qualifying donation, the Scottish rate limits will be increased by the grossed up amount of the gift in addition to the basic and additional rate limits applicable elsewhere in the UK.