Tax Code SD0 / SD1 / SD2 Explained

SD codes are Scottish codes that tax all income from a job or pension at one rate with no allowance, usually for second incomes. SBR = 20% basic, SD0 = 21% intermediate, SD1 = 42% higher, SD2 = 45% advanced and SD3 = 48% top. Note SD0 is 21%, not 40% like D0 in the rest of the UK.

How your pay is taxed on SD0 / SD1 / SD2

Every pound from that source is taxed at the single rate. Example on £30,000 a year (£2,500 a month): SBR £500/month; SD0 £525; SD1 £1,050; SD2 £1,125; SD3 £1,200. These codes are correct when your main job already uses your allowance and the lower Scottish bands.

Tax-free allowance from this codeNone — all taxed at 21%Scottish rates · Cumulative

Income tax with this code	£6,300
Income tax with standard 1257L	£3,451
Difference per month	£237.41

Your result is ready

Why you might have this code

This is a second job or pension and your main Scottish income already reaches that band.
HMRC estimates your combined income using your main income figures.

What to do

Check the code HMRC holds for you in your personal tax account (GOV.UK sign-in) or the HMRC app – it also shows how the number was worked out.
Compare it with the code on your latest payslip. If they differ, ask payroll whether they have applied HMRC’s latest notice.
If your main income has changed, update HMRC so the second-job code matches your real band.
If this is your only job, it should be S1257L – tell HMRC.

See all tax codes or check your take-home with the UK salary calculator.

Which flat-rate code matches your main income

HMRC’s general rule is that your main job uses your allowance and the lower bands first. Your second job or pension then gets the flat-rate code for whichever Scottish band your main income has reached. With the standard allowance, the gross pay thresholds for 2026/27 are:

Main income reaches	Scottish band	Second-source code	Rate on every £1
up to £16,537	Starter	S0T (not a flat rate)	19% first, then up the bands
£16,538 to £29,526	Basic	SBR	20%
£29,527 to £43,662	Intermediate	SD0	21%
£43,663 to £75,000	Higher	SD1	42%
£75,001 to £125,140	Advanced	SD2	45%
over £125,140	Top	SD3	48%

Worked example: a second job that straddles two bands

Flat-rate codes go wrong when the second income crosses a band boundary. Take a main job paying £40,000 – inside the intermediate band, which ends at £43,662 – and a £6,000 second job coded SD0. SD0 deducts £1,260. But £2,338 of the second income is above the higher-rate threshold, so the tax actually due on it is £1,751. That leaves £491 unpaid.

HMRC fixes straddling cases with an “adjustment to tax rate bands” restriction in your main code. Its manual shows the method with a 2018/19 starter-rate example: tax on all income together was £610, tax worked out source by source was £598.50, and the £11.50 difference ×100 ÷ 19 gave a £61 restriction at the main job. If your code has no such restriction and your income straddles a band, expect a P800 after the year ends.

How payroll applies SD codes

HMRC’s 2026/27 manual tables tell employers to multiply the whole pay by 0.20 for SBR, 0.21 for SD0, 0.42 for SD1, 0.45 for SD2 and 0.48 for SD3. HMRC’s PAYE Manual also reserves D codes numbered 2 to 8 for higher rates set by the Scottish Government, always with an S prefix. That allows for new Scottish bands without inventing a new kind of code.

HMRC’s system defaults SD0 (like D0 and D1) to a week 1 / month 1 basis, and its manual says the other Scottish D codes can be issued on either basis. On a week 1 / month 1 basis payroll can’t refund an over-deduction during the year, so the correction waits for a cumulative code or the year-end check.

Checking an SD code

Find HMRC’s estimate of your main job’s pay in your personal tax account and compare it with the band table above.
If a pay rise has moved your main income into a new band, your second-job code should follow – for example from SD0 to SD1.
If you’ve left the main job, the second job should usually go back to S1257L. Report the leaving date to HMRC.
If you’ve moved out of Scotland, the S prefix should drop and the code becomes BR, D0 or D1 instead. Your taxpayer status is decided for the whole year, so the change is backdated.

Payslip check for SD codes

Each SD code is a single percentage of the period’s taxable pay. On £1,000 of taxable pay, expect £200 on SBR, £210 on SD0, £420 on SD1, £450 on SD2 and £480 on SD3. Any other figure means payroll is using a different code from the one HMRC holds.

If HMRC moves you to a different SD code part-way through the year – for example after a pay rise at your main job – the new code normally applies only from the next payday. The difference for earlier months is dealt with by an in-year adjustment or at year end.

Frequently asked questions

Is SD0 the same as D0?

No. SD0 is 21% (Scottish intermediate rate); D0 is 40%.

When would I get SD1?

When your main income already exceeds the top of the Scottish intermediate band (£43,662 in 2026/27), so extra income is taxed at 42%.

What is SD3?

All income taxed at the 48% Scottish top rate, for income above £125,140.

Can I get a refund if my SD code is wrong?

Yes – through payroll after correction or by P800 after the tax year.

Is there an SD code for the 19% starter rate?

No. When your main income is in the starter band, HMRC codes the second source S0T so that it starts at the starter rate and moves up through the Scottish bands.

Could there be an SD4?

HMRC’s manual allows Scottish D codes numbered 2 to 8 so new Scottish rates can be handled. For 2026/27 the highest in use is SD3, at the 48% top rate.

Why is my SD0 second job leaving me with a bill?

Probably because your combined income crosses £43,662. Part of the second income then belongs in the 42% band, and SD0 only takes 21%.

Can my second pension be coded SD1?

Yes. If your main pension or salary is already above £43,662, a second pension is taxed at the 42% Scottish higher rate on every pound, just like a second job.

Does an SD code mean I have no Personal Allowance?

Not on its own. It means this source gets no allowance, because your main job or pension already uses it. Your allowance is still given at the main source.

Sources

Figures are taken from official government publications and were last reviewed on 2026-10-03.