The tax code SD0 is a Scottish flat-rate code that taxes all income from a given source at 19%, Scotland's Starter rate, with no Personal Allowance applied. It is the lowest of Scotland's flat-rate codes and is relatively uncommon. Understanding when it applies requires knowing Scotland's unique six-band income tax structure.
What is Scotland's Starter rate?
Scotland introduced the Starter rate in April 2018 as the lowest taxable band, sitting below the Basic rate. For 2025-26:
- Starter rate: 19% on income between £12,571 and £15,397
- Basic rate: 20% on income between £15,398 and £27,491
- Intermediate rate: 21% on income between £27,492 and £43,662
The Starter band covers only £2,826 of income per year (£15,397 − £12,571). This narrow band means SD0 is typically relevant only for low-income second jobs or very small secondary income sources.
SD0 take-home pay examples
| Gross income (this source) | Tax at 19% (SD0) | Tax at 20% (SD1/SBR) | SD0 saving |
|---|---|---|---|
| £5,000 | £950 | £1,000 | £50 |
| £10,000 | £1,900 | £2,000 | £100 |
| £15,000 | £2,850 | £3,000 | £150 |
| £20,000 | £3,800 | £4,000 | £200 |
The difference between SD0 and SBR/SD1 is 1 percentage point, modest in absolute terms but meaningful for low-income secondary work.
Why does SD0 exist?
Scotland's multi-band structure means HMRC needs separate codes to match the correct rate to secondary income. England has no Starter rate equivalent, so the nearest English code is BR (20%). SD0 exists specifically for Scottish taxpayers whose secondary income falls in the 19% Starter band rather than the 20% Basic band.
When will HMRC give you SD0?
HMRC assigns SD0 when it has specific information that additional income falls into the Starter rate band. In practice this is rare, most second jobs default to SBR, but it may be issued when:
- HMRC has detailed information about your total income levels across sources
- Your combined income from all sources means secondary income falls in the £12,571-£15,397 band
- You have explicitly requested a specific band code following a tax review
Frequently asked questions
What does SD0 tax code mean?
SD0 means you are a Scottish taxpayer and all income from this source is taxed at 19% (Scotland's Starter rate) with no Personal Allowance. S = Scotland, D0 = Starter rate flat code.
Is SD0 correct for my situation?
SD0 is correct if your secondary income falls in the Scottish Starter rate band (£12,571-£15,397). If it appears on your only job, contact HMRC, you should have S1257L instead.
How does SD0 compare to SBR?
SD0 taxes at 19%, SBR at 20%. For a £10,000 secondary income, SD0 saves you £100 per year versus SBR. Both codes apply with no Personal Allowance.
Do I pay National Insurance on SD0?
Yes. National Insurance is calculated independently of your income tax code. Under SD0 you pay 8% NI on earnings between £12,570 and £50,270 and 2% above that, exactly as normal.