Tax Code SD3 Explained
SD3 taxes all income from this source at Scotland's Higher rate of 42% — with no Personal Allowance. Scotland's Higher rate (42%) is higher than England's (40%), making SD3 noticeably more costly than the England D0 code. It applies when additional income falls into the band from £43,663 to £75,000. This creates a significant tax burden on second-job income for higher earners in Scotland.
What does tax code SD3 mean?
Tax code SD3 taxes all income from this source at 42%, Scotland's Higher rate. This is 2% more per pound than England's D0 code (40%). On £30,000 of secondary income, SD3 costs £600 more than D0.
Who gets tax code SD3?
Scottish residents with substantial combined income — where additional earnings from a second job or income source fall into the Higher rate band. Someone with a main salary above £43,662 in Scotland would typically have a D0 or SD3 code on any secondary employment.
Scottish Income Tax: Scotland sets its own income tax rates. For 2025-26, Scottish rates diverge meaningfully from England above ~£30,000 — the 42% Higher rate kicks in at £43,663 versus £50,270 in England. National Insurance is the same as the rest of the UK.
Take-home pay on tax code SD3 — 2025-26 examples
Examples below show Income Tax and take-home pay at common salary levels. National Insurance (NI) is also shown separately — NI is not affected by your tax code and applies on the same basis for all employees.
| Gross Salary | Income Tax | NI (est.) | Take-Home | Effective IT Rate |
|---|---|---|---|---|
| £20,000 | £8,400 | £594 | £11,006 | 42.0% |
| £25,000 | £10,500 | £994 | £13,506 | 42.0% |
| £30,000 | £12,600 | £1,394 | £16,006 | 42.0% |
| £35,000 | £14,700 | £1,794 | £18,506 | 42.0% |
| £40,000 | £16,800 | £2,194 | £21,006 | 42.0% |
| £45,000 | £18,900 | £2,594 | £23,506 | 42.0% |
| £50,000 | £21,000 | £2,994 | £26,006 | 42.0% |
| £60,000 | £25,200 | £3,211 | £31,589 | 42.0% |
| £75,000 | £31,500 | £3,511 | £39,989 | 42.0% |
| £100,000 | £42,000 | £4,011 | £53,989 | 42.0% |
Take-home = Gross − Income Tax − National Insurance. No pension, student loan or other deductions included. NI calculated at 8% between £12,570–£50,270 and 2% above. Effective IT Rate shows Income Tax as a percentage of gross salary.
Tax code SD3 vs 1257L: take-home comparison
How much more or less you take home on SD3 compared to the standard 1257L code at the same gross salary. A negative number means less take-home pay.
| Gross Salary | 1257L Take-Home | SD3 Take-Home | Difference |
|---|---|---|---|
| £20,000 | £17,920 | £11,006 | -£6,914 |
| £25,000 | £21,520 | £13,506 | -£8,014 |
| £30,000 | £25,120 | £16,006 | -£9,114 |
| £35,000 | £28,720 | £18,506 | -£10,214 |
| £40,000 | £32,320 | £21,006 | -£11,314 |
| £45,000 | £35,920 | £23,506 | -£12,414 |
| £50,000 | £39,520 | £26,006 | -£13,514 |
| £60,000 | £45,357 | £31,589 | -£13,768 |
| £75,000 | £54,057 | £39,989 | -£14,068 |
| £100,000 | £68,557 | £53,989 | -£14,568 |
Both columns include Income Tax and National Insurance. No pension or student loan deductions. 1257L = standard Personal Allowance of £12,570.
If you have tax code SD3, here's what you should know
- Your tax code appears on your payslip, P60, and any correspondence from HMRC about your PAYE tax.
- Your employer uses this code to calculate how much Income Tax to deduct from each pay period — they do not set it themselves.
- If your circumstances change (new job, change in benefits, marriage allowance), your code should update automatically — but it is worth checking.
- You can view and update your tax code online via your Personal Tax Account at gov.uk.
- If you think your code is wrong, contact HMRC on 0300 200 3300 or use the HMRC app.
- An incorrect tax code can mean you overpay or underpay tax — overpayments are refunded, underpayments are collected in future years.
Frequently asked questions
What does tax code SD3 mean?
SD3 taxes all income from this source at Scotland's Higher rate of 42% — with no Personal Allowance. Scotland's Higher rate (42%) is higher than England's (40%), making SD3 noticeably more costly than the England D0 code. It applies when additional income falls into the band from £43,663 to £75,000. This creates a significant tax burden on second-job income for higher earners in Scotland.
Who gets tax code SD3?
Scottish residents with substantial combined income — where additional earnings from a second job or income source fall into the Higher rate band. Someone with a main salary above £43,662 in Scotland would typically have a D0 or SD3 code on any secondary employment.
How much do I take home on tax code SD3 earning £30,000?
On tax code SD3 with a £30,000 salary, you take home £16,006 per year (£1,334 per month) after Income Tax of £12,600.
Is tax code SD3 correct for me?
Your tax code is set by HMRC based on your individual circumstances. If you believe your tax code is wrong, contact HMRC on 0300 200 3300 or check your Personal Tax Account at gov.uk. An incorrect code could mean you are paying too much or too little tax.
How do I change tax code SD3?
To change tax code SD3, contact HMRC directly on 0300 200 3300 or update your details via your Personal Tax Account at gov.uk. Your employer cannot change your tax code — only HMRC can issue a new one. Once HMRC updates your code, they will notify your employer and the change will appear on your next payslip.
Will I get a refund if tax code SD3 was applied in error?
If tax code SD3 was applied incorrectly and caused you to overpay Income Tax, HMRC will refund the overpayment. This typically happens automatically via a P800 tax calculation sent after the tax year ends (April). For a faster refund, contact HMRC directly once the correct code has been issued. Overpayments can also be reclaimed through Self Assessment if you file a return.
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