Welsh government draft Budget: the key points

In return for the tax revenue generated by the Welsh taxes, the UK government reduces the block grant funding it provides to Wales by an equivalent amount.

It is essential the devolved Welsh taxes – together with the two local taxes, council tax and non-domestic rates (NDR) – are operated efficiently and effectively, to generate the revenue needed to fund Wales’ vital public services, such as health, social services, education and transport infrastructure.

Income tax is partially devolved to Wales, which means that while the Welsh government is able to vary the three income tax rates (basic, higher and additional) for Welsh taxpayers, all other aspects of the tax remain the responsibility of the UK government, and HMRC continues to administer income tax in Wales.

The process involves the UK government reducing each of the three UK income tax rates for Welsh taxpayers by 10p and making a corresponding reduction to the Welsh block grant, which funds devolved public services in Wales.

Through a vote at the Senedd, the Welsh government decides whether to set WRIT 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 WRIT from Welsh taxpayers for at least as long as the economic impact of coronavirus lasts, the Welsh government intends to set the WRIT for 2023/24 at 10p, maintaining the current levels. This proposal must be confirmed by the Senedd, through a motion prior to the agreement of the final 2023/24 Budget.

In the UK government’s 2022 Autumn Statement the additional rate threshold was reduced from £150,000 to £125,140.

Table A shows the proposed rates and thresholds, based on the 2023-24 income tax thresholds and personal allowance. 

Changes to land transaction tax

Table 1 LTT residential main rates (before 27 July 2020 and from 1 July 2021)

Table 2 LTT residential higher rates (from 22 December 2020)

Table 3 LTT non-residential main rates (from 22 December 2020)

Table 4 LTT non-residential lease rent rates (from 22 December 2020)

Landfill disposals tax

The draft Budget announces that it is proposed the landfill disposal tax rates increase with forecasted levels of inflation (measured through RPI) with effect from 1 April 2022. This continues the policy of maintaining consistency with the UK government’s approach to landfill tax rates and increasing in line with inflation at the start of each financial year.

Table 5 LDT rates (rate per tonne)