Welsh rates of Income Tax (WRIT)

29 January 2019

The Welsh government confirmed that for 2019-20 the rates of Income Tax paid by Welsh taxpayers will continue to be the same as those paid by English and Northern Irish taxpayers, however this does still need to be approved by the National Assembly for Wales. In the meantime what do we already know about the new administration of tax?

From 6 April 2019, people with a main residence in Wales and who pay income tax will pay Welsh rates of income tax. From April, the UK government will reduce the three rates of income tax paid by Welsh taxpayers, in line with the system in Scotland. As a result the basic rate drops from 20% to 10%; the higher rate from 40% to 30%; and the additional rate from 45% to 35%.

The Welsh Government has committed not to increase income tax rates in Wales for the duration of the current Assembly (due to continue until May 2021) so Welsh tax payers will be paying the same rates as their counterparts’ resident in England and Northern Ireland.

In November 2018 HMRC wrote to over 2 million customers with a main residence in Wales telling them about Welsh rates of Income Tax. This includes people living in Wales with an active record of employment (regardless of where they work). According to a report from the National Audit Office (NAO) identifying the Welsh taxpayer population is the main challenge to HMRC in implementing the Welsh rates of income tax.

PAYE individuals who are resident in Wales will receive a new tax code that begins with ‘C’. HMRC will be sending out ‘C’ PAYE codes to employers during February and March for all employees where HMRC records show they are resident in Wales. This will include taxpayers whose income is below the tax threshold and also those who are self-employed -they will be asked to note their country of residence on their 2019-20 tax return.

 

With regard to pensions schemes, HMRC published a relief at source newsletter on 19 January which confirmed that the Welsh Budget does not give rise to any changes for schemes operating relief at source.

 

Ahead of the 2021 National Assembly elections, it is expected all the political parties in Wales will set out in their manifestos what they would do with income tax if they formed the next Welsh Government. Further information on Welsh Income Tax can be found through the links below.

 

 


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