Background to the report

The Scotland Act 2016 gave the Scottish Parliament power to determine the tax bands and rates (excluding the personal allowance) paid by Scottish taxpayers on all non-savings, non-dividend income from 6 April 2017. The Scottish Parliament has set income tax rates differently in Scotland to the rest of the UK.

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In 2022-23 rates between Scotland and the rest of the UK typically varied by a single percentage point, but the threshold at which the higher rate was payable in Scotland was lower than in the rest of the UK. For 2022-23, the amount of income subject to the starter and basic rates increased by 3.1% for Scottish taxpayers in line with CPI (Consumer Prices Index) inflation as at September 2021, while the thresholds for the higher and top rates were frozen. HM Revenue & Customs (HMRC) administers and collects Scottish income tax as part of the UK tax system.

Following the end of each tax year, HMRC produces a provisional estimate of Scottish income tax revenue for that year. It calculates the final outturn the following year once it has received further information from taxpayers and employers. This report covers the final outturn for 2021-22 and the provisional estimate for 2022-23.

Scope of the report

The NAO has statutory responsibilities for auditing HMRC’s collection of Scottish income tax. This report assesses:

  • HMRC’s calculation of the 2021-22 income tax revenue for Scotland (the ‘outturn’) and assurance on the correctness of amounts brought to account (Part One)
  • HMRC’s estimate of the 2022-23 income tax revenue for Scotland and our view on the estimate methodology (Part One)
  • key controls operated by HMRC to assess and collect income tax (Part Two)
  • HMRC’s approach to assessing and mitigating the risk of non-compliance with Scottish tax requirements (Part Two)
  • the cost of administering Scottish income tax. We provide assurance on the accuracy and fairness of these amounts in the context of the agreement between HMRC and the Scottish Government (Part Three)


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