Next steps in Welsh tax devolution confirmed

29 January 2018

The first Welsh taxes for almost 800 years are ready to be switched on, with land transaction tax and landfill disposals tax replacing stamp duty land tax and landfill tax from 1 April 2018. Income tax will become devolved from April 2019.

Following an assessment of the Joint Exchequer Committee (Officials) on 10 January, the Welsh government, Welsh Revenue Authority and HMRC confirmed that they are ready for the transition to the new devolved taxes.

The UK government legislated for stamp duty land tax and landfill tax devolution in the Wales Act 2014 and in the Wales Act 2017 legislated to give the Welsh government powers over Welsh rates of income tax from April 2019.

From April 2019, the National Assembly for Wales will be able to vary the rates of income tax payable by Welsh taxpayers. Responsibility for many aspects of income tax will remain with the UK government, and the tax will continue to be collected by HMRC for Welsh taxpayers.

Welsh rate of income tax

From April 2019, the UK government will reduce each of the 3 rates of income tax – basic, higher and additional rate – paid by Welsh taxpayers by 10p. The National Assembly for Wales will then decide the 3 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.

If the National Assembly sets each of the Welsh rates of income tax at 10p, this will mean the rates of income tax paid by Welsh taxpayers will continue to be the same as that paid by English and Northern Irish taxpayers.

The National Assembly may decide to set different rates to reflect Wales’ unique social and economic circumstances.

Further information can be found in the Welsh rates of income tax FAQs.