Scottish tax change is less than a month away, and salons need to be ready, NHBF warns

Hairdressing and beauty salons and barber shops in Scotland are being reminded that income tax rules north of the border will be changing from next month.

From 6 April a new Scottish rate of income tax is being introduced that will mean some of the tax individuals pay will go direct to the Scottish Government.

This Scottish element is being set at 10%, but the government is emphasising that individuals will still pay the same rate of tax overall as they were before. Personal allowances (the amount you can earn before your income is taxed) will also remain unchanged.

For salons, the main change is ensuring their payroll provider or administrator has updated their systems to apply a new “S” tax code to employees who are classed as Scottish taxpayers. Under the new system, all Scottish taxpayers will have a new tax code prefixed by this letter.

The change will not, however, affect how salons report or make payments for income tax or affect National Insurance contributions. Employers will not need to show the Scottish income tax rate separately on P60 forms or payslips, but they will need to show the “S” Scottish tax code.

Whether an employee has a “S” tax code will depend on their residential address. So it is important employees know they need to inform HM Revenue & Customs if they change address to ensure they have the correct tax code and are paying the correct income tax.

NHBF chief executive Hilary Hall said:

Apart from seeing the new ‘S’ code on their payslip or P60, most salon employees in Scotland should not be affected on a day-to-day level by this change as the tax, NI and any pension contributions they pay shouldn’t change.

“Separately, salons need to factor in that this change is in addition to the arrival next month of the new £7.20-an-hour National Living Wage for employees aged 25 and over, who are not in the first year year of an apprenticeship, which will be a change across the UK. Scottish salons will therefore need to be making sure their payroll systems are ready for both changes,” Hilary added.