HMRC software developer update on Welsh tax changes

20 June 2018

HMRC’s Software Developers Support Team (SDST) has provided the following update:


From April 2019 the Welsh Government will be able to vary the rates of income tax paid by taxpayers who live in Wales (Welsh taxpayers).

The UK government will reduce each of the three rates of income tax – basic, higher and additional rate paid by Welsh taxpayers – by 10p. The Welsh Government will then decide the three Welsh Rates of Income Tax, which will be added to the reduced UK rates.  The combination of reduced UK rates plus the Welsh rates will determine the overall rate of income tax paid by Welsh taxpayers.  Revenue from the Welsh Rates of Income Tax will go to the Welsh Government.

Welsh Taxpayers employed or in receipt of a taxable pension will have the letter ‘C’ (Cymru) as a prefix to their tax code.

Responsibility for many aspects of income tax will remain with the UK government, and the Welsh Rates of Income Tax will continue to be collected by HMRC.

Details of the proposed rates will be announced in the Welsh Government Budget later this year.


In scope

  • PAYE (basic, higher and additional rates)

  • Income from pensions and other non-savings sources

  • Self-Assessment


Out of scope

  • The following powers are not devolved to Welsh Government by the Wales Act 2014:

    • Ability to vary the tax free allowance

    • Ability to vary the threshold of the existing tax bands

    • Ability to introduce further tax bands

    • Ability for an individual to self-declare their residency status via a change to the starter checklist


Next Steps

To enable you to support these changes in your payroll software product, HMRC will provide revised technical specifications, updated test services and payroll guidance.  Current plans are:

  • Summer 2018 – revised schemas for the FPS, P6 and P9 to allow for a ‘C’ value in the Tax Regime

  • October 2018 – LTS, TPVS and OXG test services updated

  • January 2019 – payroll guidance (following Ratification of Welsh rates).