Background to the report

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

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The Scottish Parliament has set different income tax bands and rates in Scotland from the rest of the UK. In 2018-19 it introduced a five-band system, which continued until 2023-24.

In 2023-24, Scottish taxpayers paid a lower marginal rate of tax for those in the lowest band and a higher marginal rate for taxpayers earning more than £25,688. The threshold at which the higher rate was payable in Scotland was lower than in the rest of the UK.

For 2023-24, the top rate of income tax in Scotland increased from 46% to 47% and the higher rate of income tax increased from 41% to 42%. The level at which taxpayers pay the top rate of income tax reduced from £150,000 to £125,140 for taxpayers in both Scotland and the rest of the UK. All other income tax rates and thresholds were frozen.

HMRC has calculated that there were 2.8 million Scottish taxpayers in 2022-23 (2021-22: 2.7 million).

Scope of the report

This report assesses:

  • HMRC’s calculation of the 2022-23 income tax revenue for Scotland (the ‘outturn’) and assurance on the correctness of amounts brought to account
  • HMRC’s estimate of the 2023-24 income tax revenue for Scotland and our view on the estimate methodology
  • key controls operated by HMRC to assess and collect income tax
  • HMRC’s approach to assessing and mitigating the risk of non-compliance with Scottish tax requirements
  • the cost of administering Scottish income tax

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