Tax code SD1: what it means
Tax code SD1. Scottish higher rate: a second income taxed flat at 42%. On £20,000 it deducts £8,400 of Income Tax, which is £6,954 a year more than the standard code would take on the same income.
- Example income
- £20,000
- Income Tax under SD1
- − £8,400
- Under the standard code
- − £1,446
- Extra tax under SD1
- £6,954/yr
What does tax code SD1 mean?
SD1 taxes every pound of this income at Scotland's 42% higher rate, with no allowance. It is applied to second jobs and pensions when your main income is estimated to fill the bands below, meaning over roughly £43,660 in 2026/27. Note it is 2 points higher than the equivalent English code (D0 at 40%): the Scottish higher rate has been 42% since 2023.
Who gets it: Scottish higher-rate taxpayers (main income roughly £43,660 to £75,000) with a second employment, NHS bank shifts on a separate payroll, or a pension alongside a salary.
How much tax will I pay on tax code SD1?
The table shows the Income Tax taken from income on code SD1, against what the standard code (S1257L) would take on the same amount. Read the difference column carefully: if this is a genuine second income and your allowance is used by your main job, the "extra" is broadly correct; the code exists to collect it. If this is your only income, that same column is money you are overpaying.
| Income | Tax under SD1 | Under S1257L | Difference |
|---|---|---|---|
| £5,000 | £2,100 | £0 | +£2,100 |
| £10,000 | £4,200 | £0 | +£4,200 |
| £15,000 | £6,300 | £462 | +£5,838 |
| £20,000 | £8,400 | £1,446 | +£6,954 |
| £30,000 | £12,600 | £3,451 | +£9,149 |
| £40,000 | £16,800 | £5,551 | +£11,249 |
Full-year Income Tax, 2026/27 rates (Scottish bands). Work out your own figure, including National Insurance, with the income tax calculator.
Why do I have tax code SD1?
HMRC builds your code from what it knows about your jobs, pensions, benefits and allowances. The usual reasons for SD1:
- Your main income is over the Scottish higher-rate threshold (£43,662), which is much lower than England's £50,270.
- You do bank/agency shifts paid on a separate payroll from your main NHS or council job.
Your code notice (P2, or the "tax code" section of your Personal Tax Account) itemises the exact adjustments behind your number. That breakdown is the first place to look when something seems off.
Is tax code SD1 wrong? How to check and fix it
● Often wrong: check yours now
SD1 is right when your main income genuinely exceeds the Scottish higher threshold. Because that threshold (£43,662) is so much lower than England's, plenty of people are correctly on SD1 in Scotland who would be on BR down south. That is not an error. It is wrong if your main income has dropped into the intermediate band (overpaying 21 points on every pound) or climbed past £75,000 into the 45% advanced band (underpaying). Check the estimate after any change of hours.
Checking takes two minutes and fixing it is free. Never pay a claims firm for this:
- Find your code on your latest payslip, your P60, or in the HMRC app / Personal Tax Account.
- Read the breakdown. Your Personal Tax Account lists every adjustment (benefits, expenses, underpayments) behind the number. Check each one is still true.
- Tell HMRC what changed: update your job, benefit or income details online, or call 0300 200 3300. Employers cannot change your code; only HMRC can.
- The refund is automatic. A corrected code reaches your employer within days and any overpaid tax comes back through your next payslips. For closed tax years HMRC reconciles and sends a P800 letter, and you can claim online from there.
Official sources: GOV.UK: Scottish Income Tax · Scottish Government: Income Tax rates