Devolution of income tax in Wales

23 January 2015

The Wales Bill received Royal Assent on 17 December 2014 and is now The Wales Act 2014, an act of law.

Subject to a referendum The Wales Act 2014 will make provision about the setting by the Welsh Assembly of a rate of income tax to be paid by Welsh taxpayers and about the devolution of taxation powers to the Assembly.

The introduction of a Welsh rate of income tax would be structured along the lines of the Scottish rate (due to come into force in 2016). It would be administered by HMRC as part of the UK-wide income tax system and applied to non-savings income. The Welsh Parliament would be able to set a rate of Welsh income tax which would be added to each of the main UK rate bands after ten pence in the pound had been deducted from each rate.

The Act will also make related amendments to Part 4A of the Scotland Act 1998 on the definition of a Scottish taxpayer. This is to ensure that an individual cannot be a Welsh and Scottish taxpayer in the same year, if the Welsh rate is introduced.