The Welsh Rate of Income Tax came into existence on April 6, 2019. On behalf of the Welsh Government, HM Revenue and Customs (HMRC) collects the Welsh income tax rate.

Welsh income tax does not exist as a separate tax. The Welsh Assembly has the authority to influence a portion of the income tax that Welsh taxpayers pay. To accomplish this, the National Assembly for Wales has the power to establish Welsh rates of income tax, which measure the total income tax rate payable by Welsh taxpayers on various income types.

HMRC is in charge of administering and collecting Welsh income tax through the Pay as You Earn (PAYE) and Self-Assessment systems.

It means that if users disagree with a Welsh income tax decision, they must go through the HMRC appeals process. Furthermore, if you are dissatisfied with the service provided, you should follow HMRC’s complaints procedure.

Welsh income tax is generally payable by ‘Welsh taxpayers’ on non-savings and non-dividend income. Welsh taxpayers continue to pay income tax on their savings and dividend income at the same rates as the rest of the UK.

The Welsh government proposes Welsh income tax rates in its annual draught budget, which is published in the autumn. The National Assembly for Wales must then agree on and enact these rates.

Who is responsible for the Welsh Rate?

HM Revenue & Customs (HMRC) is in charge of determining who is a Welsh taxpayer and, as a result, issuing new tax codes beginning with the letter ‘C’. Employers and pension providers are not required to make this decision and should only use a Welsh tax code if instructed to do so by HMRC.

Employees will be classified as Welsh taxpayers if their HMRC address is in Wales. The employee’s responsibility is to notify HMRC if their address has changed or which of their homes counts as their primary residence if they have one in Wales and elsewhere in the UK. If an employee disagrees with their tax code, they should read the guidance on the Welsh rate of Income Tax before contacting HMR.

Employer Responsibilities

Employers need only apply the Welsh rate of Income Tax code to their Welsh taxpayer employees to modify their report or make payments for Income Tax to HMRC.

If you are given a P45 with a Welsh tax code, proceed as usual. Welsh tax codes are also calculated on a week-to-month basis.

Employers are not required to show the Welsh rate on employees’ P60s or payslips, but they must show the Welsh tax code.