Written Statement: Draft Budget 2026-27: Welsh Taxes

Welsh taxes make a vital contribution to the funding available in Wales every year. Taken together, Welsh Rates of Income Tax (WRIT), Landfill Disposals Tax (LDT), Land Transaction Tax (LTT) and non-domestic rates will contribute more than £5bn to the Welsh Budget in 2026-27.

This statement outlines the key decisions we are proposing to take in relation to Welsh taxes.

Welsh Rates of Income Tax (WRIT)

The Welsh Government will set the Welsh rates of income tax at 10p in each band, subject to Senedd approval prior to the Final Budget for the three income tax rates (basic, higher and additional). This maintains the current levels and will deliver parity of income tax rates for taxpayers in Wales with those in England and Northern Ireland. This means there will be no changes to WRIT in 2026-27.

The current Ready Reckoner for WRIT provides estimates of the potential revenue impact from changes to each of the three Welsh Rates of Income Tax in 2026-27. To accompany the Final Budget, we will publish an updated Ready Reckoner which will incorporate the autumn WRIT forecast for 2026-27 and provide a new forecast for 2027-28.  

Land Transaction Tax (LTT)

For 2026-27, the residential and non-residential rates and thresholds for LTT will remain unchanged.

I intend to make further changes to the Multiple Dwelling Relief (MDR) regime, to introduce a new ‘equalisation’ rule to create per-dwelling parity between multiple-dwelling and single-dwelling transactions liable to the higher residential rates, and to increase the existing MDR minimum tax rule rate from 1% to 3%. These changes will improve fairness for taxpayers who purchase more than one dwelling in the same transaction, or in linked transactions 

A new refund rule for the higher residential rates of LTT will also be made. This will apply where a private landlord (the taxpayer) buys a dwelling and then leases it to a local authority in Wales, through Leasing Scheme Wales, which is a Welsh Government scheme and helps provide more affordable homes. The main residential rates of LTT will continue to apply to the transaction.

In May 2025, the Affordable Housing Taskforce recommended the Welsh Government should provide an LTT relief to local authorities when they buy property for social housing purposes, similar to the existing relief for registered social landlords (RSL). I will be reviewing the effectiveness of the current RSL relief and consider whether it is appropriate to replicate for local authorities.

Landfill Disposals Tax (LDT)

The Draft Budget sets out our intention to increase the standard rate of LDT for 2026-27 by forecast Retail Price Index (RPI), and to maintain the lower rate and the unauthorised disposals rate at 5% and 150% of the standard rate respectively. 

The monetary value of the rates will be based on the Office for Budget Responsibility’s (OBR) updated forecasts of RPI, which will be published alongside the UK Government’s Autumn Budget on 26 November. This will ensure public services in Wales continue to benefit from the tax revenues and that LDT continues to contribute to the reduction of waste to landfill while minimising the risk of the movement of waste across borders.

The Welsh Government will provide an additional £285,000 to the Welsh Revenue Authority to fund increased investigation activity in response to unauthorised disposals. The OBR forecasts this funding will result in additional LDT revenues of £715,000 in 2026-27 as a result of increased compliance activity.

The UK Government has consulted proposals to reform landfill tax in England and Northern Ireland this year. At the outset of the tax devolution process I made clear my intention to avoid changes for changes sake. Refilling of quarries, dredging and water discounting were three areas where we intentionally made changes and, in the case of refilling of quarries and dredging, chose to relieve these activities rather than exempt them from LDT. As a result of these changes made at the introduction of the tax, these reliefs are considered by the WRA to be low risk and there is no evidence of them being subject to abuse. I count this a success of tax devolution.

I continue to monitor the UK Government’s approach to the qualifying fines regime and will not hesitate to reform our own system in Wales to protect against waste unnecessarily crossing the border and to ensure our tax continues to contribute to our environmental and circular economy goals.

Finally, while we intend to increase the LDT rates by forecast RPI, given the implications of a potential divergence between landfill tax and LDT, if it is necessary to protect against unintended behavioural effects, I will present the Senedd with revised rates.