List of Scottish Tax Codes - Guide for Employers

If you’re a UK business with Scottish employees, you’re going to need to know about tax codes.

Tax codes are a vital part of managing payroll, and helping you accurately calculate, deduct and pay the right amount of Scottish Income Tax to the government.

Tax isn’t always easy to get your head around, especially if you’ve just started your first business. We’re here to help, with a handy guide explaining what tax codes in Scotland mean and how they work. We’ll also run through a list of the most common Scottish tax codes.

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What do tax codes mean in Scotland?

Tax codes are used in Scotland to identify how much income tax an employee should be paying to HM Revenue & Customs (HMRC). HMRC also issues tax codes in Scotland. The code tells the employer how much tax to deduct from the person’s salary or pension.

It’s crucial for both employers and workers to make sure the correct tax codes are being used. This is especially important if an employee’s circumstances change, such as they start a new job or start working more/fewer hours.

If the tax code is wrong, it could mean that the employee ends up paying too much or too little tax.

How do tax codes work in Scotland?

When a new employee joins your company, you’ll be able to get their initial tax code from their P45 form. But once the person’s information has been sent to and processed by HMRC ahead of their first payslip, this tax code may be updated.

It’s really important for employers to keep up with these changes, or it could result in the under or overpayment of tax. As the employer, it’s your responsibility to make sure you deduct and pay the correct income tax for your staff when running payroll.

How to find an employee's Scottish tax code?

If a new employee has just started working for you, you’ll need to know how to find their tax code. The easiest way is with their P45 form (issued when a person left their previous job), but you can still track down tax codes without it.

If the employee has a P45 form:¹

1. Request a completed P45 form from the employee. This will contain the person’s details, tax code and info on pay received and tax paid in the current tax year.
2. Go to GOV.UK for a tool to work out whether the tax code is the correct one to use, or if it needs updating. Follow the steps and use the information from the employee’s P45.

If the employee doesn’t have a P45 form:¹

1. Take some details from your employee so that you can set them up on your payroll system, including their address and National Insurance details.
2. Ask the employee to complete the online HMRC Starter Checklist - you can find it here.
3. Use the information from the completed checklist along with the GOV.UK tool mentioned above to find the correct tax code for your new employee. Make sure to select ‘‘You do not have their P45' when asked the date the employee left their previous employment, according to their P45.

List of Scottish tax codes

As an employer managing payroll, it can be useful to familiarise yourself with some of the most common Scottish tax codes. This can also help you spot a code that doesn’t look right.

Tax codes in Scotland look similar to those used in England and Northern Ireland, being made up of both letters and numbers. The number refers to the personal allowance, which is the amount you can earn before paying Scottish Income Tax.

The letter at the end of a typical tax code indicates how a worker’s circumstances affect their annual personal allowance.

The main difference between Scottish tax codes and those issued in England and Northern Ireland is that the former has an ‘S’ at the start. So to take the most common tax code, 1257L - this is S1257L in Scotland.²

Here’s the full list of letters used in Scottish tax codes and what they mean:²

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FAQs - Scottish tax codes

How do Scottish tax codes differ from the rest of the UK?

Scottish tax codes have the 'S' prefix (e.g., S1257L). This means that the taxpayer is subject to Scottish Income Tax rates, which may differ from those in the rest of the UK.

This prefix ensures that employers and pension providers apply the correct tax rates for Scottish taxpayers.

What does the tax code 'S1257L' mean?

The tax code 'S1257L' is the most common among Scottish taxpayers.

The 'S' indicates that Scottish Income Tax rates apply.

The number '1257' signifies a tax-free Personal Allowance of £12,570 for the tax period, in this case 2024/2025.

And the letter 'L' means the employee is entitled to the standard Personal Allowance.

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And that’s it - all the essentials you need to know about Scottish tax codes. We’ve looked at what they are and how they work, along with a list of the most common tax codes in Scotland. You should now have all the info you need to run payroll with confidence.

Sources used for this article:

Sources last checked on December 27, 2024.