Before the partial decentralisation of income tax in Scotland in April 2016, there was no need for individual calculations or precise figures – suffice it to say, for example, that a $300,000 benefit had been granted and that about 20% of beneficiaries were taxpayers with a higher tax rate, the rest being the basic rate. This was a relatively simple way for employers to pay on what was due and proved to be a success in obtaining income. If an employer is sure that it does not have employees who are Scottish or Welsh taxpayers (see below), this is maintained. It is in the interests of both Scotland and Wales to ensure that income tax revenues are maximized to fund public services in these jurisdictions. In this context, it is important that PPE calculations be made as accurately as possible based on the status of staff. From April 2016, employers should have calculated the PSA share for Scottish taxpayers using Scottish income tax rates (and from April 2017). If the employer has workers who are tax residents in Scotland and workers residing in the rest of the UK, two separate PPE calculations should be established, one for Scottish taxpayers and the other for taxpayers in the rest of the UK (RUK). If you already have an PPE, you should check to see if changes are needed for fiscal year 2019/20. If you do not currently have an PPE, you must determine whether you should enter an PPE for fiscal year 2019/2020. The deadline for signing a 2019/20 contract and updating your current contract is July 6, 2020. It`s also a good time to check if you need to set up an PPE for fiscal year 2020/2021.
With regard to the partial decentralisation of income tax in Scotland, Scotland now has powers over Scottish income tax rates and ranges under the Employment Act 1998, amended by the Scotland Act 2016. The Wales Act 2014 provides powers over Welsh income tax rates. Income tax in Scotland and Wales is levied on income defined as “non-savings, non-dividend-related” income; Overall, this includes employment income, earnings from self-employment, retirement income and income from property received by persons classified as Scottish or Welsh tax payers in a tax year. PPE liability is calculated on the basis of a prescribed PSA1 form. This is generally requested by HMRC to send and agree during July and August so that liability can be settled before October 19 (postal payment) or October 22 (electronic payments) after the fiscal year in which benefits were granted. Note that for higher and additional tax payers (higher rate in Scotland), paying tax and niCs with an PPE can be costly due to the mark-up process, which can almost double the cost of making the initial benefit available.