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Welsh Rates of Income Tax

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From April 2019, the Welsh Government will be able to vary the rates of Income Tax paid by Welsh taxpayers.

The changes

From April 2019 onwards, each year the Welsh Government will decide the rates of Income Tax paid by Welsh taxpayers. The Welsh Government could vary the Welsh rates of Income Tax or keep them the same as the rates paid by English and Northern Irish taxpayers.

What stays the same

Income Tax from Welsh taxpayers will be collected by HMRC in the same way it is now.

The amount of money people can earn before they start paying tax (their personal allowance) will be the same as it is for the rest of the UK.

The point at which people start to pay the higher and additional rates of Income Tax will be the same as in England and Northern Ireland.

Responsibility for taxing income from savings and dividends will remain with the UK government.

2019 to 2020 rates

The National Assembly for Wales  has agreed the proposed Welsh rates of income tax for 2019-20 which means there will be no change to overall income tax rates for taxpayers in Wales.

The process for setting Welsh rates of income tax

From April 2019, the UK government will reduce the 3 rates of Income Tax paid by Welsh taxpayers:

  • basic rate from 20% to 10%
  • higher rate from 40% to 30%
  • additional rate from 45% to 35%

As part of its annual budget process, the Welsh Government will decide the Welsh rates of Income Tax to be added to the reduced UK rates.   The National Assembly for Wales will then vote to decide whether it agrees those rates.

Will this affect me?

Yes, if you are a Welsh taxpayer. If you live in Wales you will be a Welsh taxpayer, regardless of where you work.

For more information see legal definition of Welsh taxpayer.