Scottish rates of income tax and deficiency relief

The Scottish Rates of Income Tax (Consequential Amendments) Order SI 2024/1289 allows deficiency relief to be calculated by reference to income taxable at the Scottish advanced rate of income tax. The point of the Order is to avoid disparities in approach across the UK and applies with effect from 2024/25 onwards.

Deficiency relief is a tax reduction which is potentially available to all UK taxpayers where at the end of certain insurance policies or contacts the taxpayer has been taxed on more than the overall economic gain on the policy or contract. From 6 April 2024 the former Scottish higher rate income tax band was split into the Scottish higher rate income tax band and the Scottish advanced rate income tax band – and so this Order extends relief to all ‘relevant rates’ of tax. The ‘relevant rates’ are now set out in a...