What’s ahead for devolved taxes and income tax in Wales?
Devolved and partially devolved Welsh taxes support the spending priorities as set out in the draft budget published on 13 December 2022. The Welsh government’s tax policies also provide an opportunity to deliver the government’s wider policy priorities in pursuit of a stronger, fairer, greener Wales.
Full details are available on the Welsh Government website, while we summarise the key points below.
The process for Wales involves the UK government reducing each of the three income tax rates for Welsh taxpayers by 10p. The Welsh government then decides whether to set the Welsh rates at 10p, thereby retaining parity between Welsh and English taxpayers, or to set different rates.
In line with its commitment not to take more in Welsh rates of income tax from Welsh families for at least as long as the economic impact of Covid-19 lasts, the Welsh government proposes to set Welsh rates of income tax for 2023/24 at 10p for the three income tax rates (basic, higher and additional), meaning Welsh taxpayers pay the same amount of income tax as those in England and Northern Ireland, with 2023/24 rates announced in the 2022 Autumn Statement.
This means income tax rates for 2023-/24 will be as below:
Tax band |
Earnings |
Tax rate |
Basic rate |
£12,570-£50,270 |
20% |
Higher rate |
£50,271-£125,140 |
40% |
Additional rate |
More than £125,140 |
45% |
Changes to land transaction tax rates – which were being developed for introduction alongside the draft budget – were brought forward to take effect from 10 October 2022. This was to avoid any uncertainty in light of the UK government’s changes to stamp duty land tax rates on 27 September. No further changes are proposed in the draft budget.
The changes which came into effect from 10 October affect the residential main rates. For the residential main rates, the starting threshold was raised from £180,000 to £225,000. The first tax rate is now set at 6% and applies to the portion of the price between £225,000 and £400,000. No changes were made to other rates, including the higher residential rates.
Further details of rates and more can be viewed on our Budget hub.