Progressive tax plans for Wales

05 October 2017

Finance Secretary Mark Drakeford has unveiled a new budget for Wales, reflecting the Welsh Government’s new tax and borrowing powers.

This budget is a significant milestone in Wales’ devolution journey. From April 2018, Wales becomes responsible for raising a proportion of its own revenue from two new taxes: land transaction tax (LTT) and landfill disposals tax (LDT), replacing stamp duty land tax and landfill tax, respectively.

New progressive rates and bands for these taxes have been announced. Under the new rates for LTT, Wales will have the highest starting threshold for the property tax in the UK. And Wales will become the first country in the UK to introduce a new higher rate of landfill disposals tax to deter people from disposing of waste illegally.

Welsh rates of income tax

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.

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.