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New Income Tax Rates for Wales Effective 6 April 2019

By Edward Kowalski, Esq.

Beginning in April 2019 the Welsh Government will decide each year the rates of income tax paid by Welsh taxpayers. The Welsh Government could vary the Welsh income tax rates or elect to keep them the same as the rates paid by taxpayers in England and Northern Ireland. On 5 April 2019, HM Revenue and Customs (HMRC) announced the income tax rates for persons living in Wales for the tax year beginning 6 April 2019 [HMRC News Update, 5 April 2019].

Range of Allowable Adjustments

From April 2019, the United Kingdom has reduced the three rates of income tax paid by Welsh taxpayers as follows:

  • basic rate from 20% down to 10%
  • higher rate from 40% down to 30%
  • additional rate from 45% down to 35%
It was up to the Welsh government to decide the Welsh rates of income tax that would be added to the reduced U.K. tax rates. Ministers are able to adjust the income tax rate by 10 pence for every one pound (10%) for each rate. Moreover, 10 pence per pound in each rate (10%) will go directly to the Welsh Treasury to be spent on public services in Wales, rather than coming to Wales through the U.K. government.

Rates for 2019 to 2020

Wales decided that income tax rates are staying the same for 2019-2020. This means that the basic rate in Wales remains at 20%, with 10% going to the U.K. and 10% going to Wales. At the higher rate of 40%, 30% will go to the U.K. and 10% to Wales. If the additional rate of 45% applies, 35% will go to the U.K. and 10% to Wales.

The rates of tax on dividends and savings interest are the same for those living in Wales as they are for the rest of the U.K.

Persons Subject to the Welsh Rates

Persons living in Wales will be paying the Welsh rates. Persons moving to or from Wales will only pay Welsh rates if they live in Wales longer than anywhere else in the U.K. during a tax year, which starts on 6 April and runs through 5 April in the following year.

Collection of the Tax

HMRC will continue to collect income tax from Welsh residents through the Pay as You Earn (PAYE) system. HMRC will add a C to the start of the tax code for residents of Wales so that the correct rates of income tax will be paid.