SD0 applies Scotland's intermediate rate of 21% to all income from this source with no personal allowance — typically a second job or pension for Scottish taxpayers.
Twenty-one per cent on every pound from this source. The SD0 tax code applies Scotland's intermediate rate to all income from this employment or pension, with no Personal Allowance. It is one of the less common Scottish flat-rate codes, sitting between SBR (20%) and SD1 (42%), and appears only when your total income from all sources places the second income squarely within Scotland's intermediate rate band.
SD0 is built from two parts. The S prefix confirms you are a Scottish taxpayer, meaning your main residence is in Scotland and your income tax follows Scottish rates. The D0 component tells your employer to apply a flat rate with no Personal Allowance, similar to the English D0 code. However, in Scotland, D0 does not mean 40%. Instead, SD0 applies Scotland's intermediate rate of 21%.
This is one of the most confusing aspects of Scottish tax codes. In the rest of the UK, D0 always means the higher rate (40%). In Scotland, the D-series codes are mapped to Scotland's unique band structure: SD0 is the intermediate rate (21%), SD1 is the higher rate (42%), and SD2 is the advanced rate (45%). The numbering does not align with English equivalents because Scotland has more rate bands.
SD0 exists because Scotland introduced an intermediate rate band between the basic rate (20%) and the higher rate (42%). This band covers taxable income from £27,492 to £43,662 in 2025/26. If your main job has already exhausted your Personal Allowance and basic rate band, and your second income falls within this intermediate window, HMRC assigns SD0 to tax it at 21%.
Scotland's intermediate rate is unique. England, Wales, and Northern Ireland do not have an intermediate rate. In the rest of the UK, the basic rate of 20% applies all the way up to £50,270. Scotland narrows the basic rate band and inserts the 21% intermediate rate above it, which means Scottish taxpayers earning between approximately £27,500 and £43,700 pay 1% more on that portion of income compared to their English counterparts.
If SD0 is on your only income source, you are missing the Personal Allowance entirely and paying 21% instead of the graduated Scottish rates that S1257L provides. Here is how the numbers compare:
| Annual income from source | Tax on SD0 (21% flat) | Tax on S1257L (Scottish bands) | Annual difference |
|---|---|---|---|
| £10,000 | £2,100 | £0 | £2,100 overpaid |
| £20,000 | £4,200 | £1,486 | £2,714 overpaid |
| £30,000 | £6,300 | £3,538 | £2,762 overpaid |
How the S1257L calculation works at £20,000: The first £12,570 is covered by the Personal Allowance (0% tax). Income from £12,571 to £15,397 falls in the starter rate band at 19%, producing approximately £537. The remaining £4,603 (£15,398 to £20,000) is taxed at 20%, producing approximately £921. Total: roughly £1,458, which rounds to about £1,486 through the PAYE system.
The SD0 calculation is far simpler: £20,000 x 21% = £4,200. No allowance, no bands, just a flat 21%.
If SD0 appears on what should be your only or main employment, the overpayment ranges from £2,100 to over £2,700 per year depending on your income. That is a significant amount of money held by HMRC that should be in your account.
SD0 is one of the rarer Scottish tax codes. It appears in a narrow set of circumstances because the intermediate rate band itself is relatively narrow (£27,492 to £43,662).
Second job where main income exhausts the basic rate band. If your main job pays around £40,000 on an S1257L code, your Personal Allowance and basic rate band are used up by that salary. If you then earn, say, £5,000 from a second job, that income falls within the intermediate rate band. HMRC assigns SD0 to tax it at 21%.
Pension income for an intermediate-rate taxpayer. A retired Scottish taxpayer with a State Pension and an occupational pension may find SD0 on the occupational pension if their total income places the second source in the intermediate band.
HMRC reallocation after income review. If you contact HMRC to report a change in income or circumstances, they may recalculate your code. Where your second income previously justified SBR (20%) but your main income has increased, HMRC may upgrade the second source to SD0 (21%).
Why SD0 is uncommon. The intermediate rate band covers only about £16,000 of income (£27,492 to £43,662). For SD0 to be assigned, your main income must push your second income into this specific window. If your main income is lower, the second source gets SBR. If it is higher, the second source gets SD1 (42%). The narrow window makes SD0 less frequently issued than SBR or SD1.
David lives in Glasgow and works a main job earning £42,000 plus a weekend role earning £6,000. His main job carries S1257L and his weekend role carries SD0.
Main job (S1257L):
| Component | Amount |
|---|---|
| Gross salary | £42,000 |
| Personal Allowance | £12,570 (tax-free) |
| Starter rate (19%) | £2,827 x 19% = £537.13 |
| Basic rate (20%) | £12,093 x 20% = £2,418.60 |
| Intermediate rate (21%) | £14,510 x 21% = £3,047.10 |
| Total tax on main | £6,002.83 |
Weekend job (SD0):
| Component | Amount |
|---|---|
| Gross weekend income | £6,000 |
| Personal Allowance | £0 |
| Tax at 21% (all of it) | £6,000 x 21% = £1,260 |
Combined position:
| Item | Amount |
|---|---|
| Total gross income | £48,000 |
| Total income tax | £7,262.83 |
| Monthly take-home (tax only) | £3,395 approx |
David's SD0 code is correct. His main income of £42,000 uses the Personal Allowance, starter rate, basic rate, and most of the intermediate rate band. His additional £6,000 from the weekend job falls in the remaining portion of the intermediate rate band (since £42,000 + £6,000 = £48,000, still below the £43,662 + £12,570 = £56,232 threshold where the higher rate kicks in for total income purposes).
Note: because HMRC uses total taxable income (income minus the Personal Allowance) to determine bands, David's total taxable income is £48,000 - £12,570 = £35,430. The intermediate band runs from £27,492 to £43,662 of taxable income, so his second income (£35,430 to £35,430... effectively the £6,000 when stacked on top) still sits within this window.
SD0 is correct if:
SD0 is probably wrong if:
If SD0 is incorrect, follow these steps to get it corrected.
Step 1: Submit your P45 or starter checklist. If you started a second job and did not hand over a P45, give it to your employer now. This helps HMRC calculate the correct code for your second income source.
Step 2: Update your HMRC Personal Tax Account. Log in at gov.uk/personal-tax-account and navigate to "Check your Income Tax." Review your employers and income estimates. If HMRC has an outdated estimate of your main income, the second source code may be wrong. Updating the income figure triggers a recalculation.
Step 3: Call HMRC on 0300 200 3300. If the online system does not resolve the issue, call the Income Tax helpline (Monday to Friday, 8am to 6pm). Have your National Insurance number and both employers' PAYE references ready. Ask them to review your tax code allocation across all income sources.
Step 4: Monitor your payslip. Once HMRC issues a corrected code, your employer applies it from the next pay period. Any overpaid tax from earlier in the year is refunded through a cumulative adjustment, meaning your next pay packet may be noticeably larger.
If the tax year has ended and you were on an incorrect SD0 code, HMRC will issue a P800 tax calculation. You can claim a refund through your Personal Tax Account or by contacting HMRC directly. Refunds can be claimed for up to four previous tax years.
Related tax codes: Scottish tax codes overview | SBR tax code | SD1 tax code
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