Welsh Ministers’ Review of the Welsh Tax Acts etc. (Power to Modify) Act 2022

Section 6^[1] of the Welsh Tax Acts etc, (Power to Modify) Act 2022 (‘the Act’) provides that there must be a review of the operation and effect the Act completed by 8 September 2026.  Specifically, the Act provides that

(1)The Welsh Ministers must—  

(a) review the operation and effect of this Act, and  

(b) publish the conclusions of the review before the end of the period of 4 years beginning with the day on which this Act comes into force.  

(2) A review under this section must include an assessment by the Welsh Ministers of alternative legislative mechanisms for making changes to the Welsh Tax Acts and regulations made under any of those Acts.  

(3) In undertaking a review under this section, the Welsh Ministers must consult Senedd Cymru and such other persons as they consider appropriate.

1.2 This document meets the Welsh Ministers’ duty under the Act. The document sets out the Welsh Ministers’ review of the Act and the assessment of alternative legislative mechanisms separately.   

1.3 The Cabinet Secretary for Finance and Welsh Language held a number of engagement activities with Senedd colleagues as part of his consultation including an Oral Statement on 16 September 2025^[2] on the launch of the consultation and a meeting with the Chair of the Senedd Finance Committee.  Separately, his officials met with the Finance Committee. Invitations for similar meetings were sent by the Cabinet Secretary to the Finance spokespersons for the Conservative Party and Plaid Cymru.

^[1] Welsh Tax Acts etc. (Power to Modify) Act 2022

^[2] Plenary 16/09/2025 - Welsh Parliament

2.1 The Act received Royal Assent on 8 September 2022 and came into force on 9 September 2022.  The review of the Act must be completed within four years of the date the Act came into force, that is, by 8 September 2026. 

2.2 As the Explanatory Memorandum and Regulatory Impact Assessment^[3] (as amended at Stage 2 of the Bill’s passage through the Senedd Cymru) set out:

1.1 It is intended that the Welsh Tax Acts etc. (Power to Modify) Bill (“the Bill”) will introduce a power to enable future amendment of certain elements of tax legislation in Wales, when required. The Bill confers a regulation-making power on the Welsh Ministers to enable them to modify the Welsh Tax Acts (and subordinate legislation made under them) in specific circumstances. This regulation making power will be subject to either a draft or made affirmative procedure, depending on the urgency of the regulations.

1.2 The Bill seeks to balance providing the Welsh Ministers with a mechanism to respond to external events that impact on devolved taxes and the associated revenues whilst equally acknowledging the essential role of Senedd Cymru (“the Senedd”) in scrutinising the Welsh Government and the legislation it introduces.

2.3 The use of the power to make regulations was limited to four specified external triggers, set out in the Explanatory Memorandum:

3.2 The Welsh Ministers’ intended purpose in introducing this Bill is to enable changes to be made to the Welsh Tax Acts by regulations where the Welsh Ministers consider that such changes are necessary or appropriate and where they are required to have effect immediately or shortly thereafter. Those changes will be permitted in order to respond to a number of external circumstances and where necessary in some cases retrospectively too. In summary:

i. to ensure the devolved Welsh taxes are not imposed where to do so would be incompatible with any international obligations;  

ii. to protect against tax avoidance in relation to devolved Welsh taxes;  

iii. to respond to changes made by the UK government to ‘predecessor’ UK taxes (that is, one where we have an equivalent devolved tax^[4]) which affect, or may affect the amount paid into the Welsh Consolidated Fund^[5], and  

iv. to respond to decisions of the courts/tribunals which affect or may affect the operation of the Welsh Tax Acts, or any regulations made under them.

2.4 In the three and a half years since the power became available to the Welsh Minsters, it has not been used.  However, serious consideration was given to its use to respond to the abolition of the stamp duty land tax (SDLT) relief for purchases of multiple dwellings (multiple dwellings relief or MDR) which came into effect on 1 June 2024 (having been announced at the final budget of the previous UK Government on 6 March 2024). The Welsh Government was able to conduct a consultation on land transaction tax reliefs in the period between the UK government’s announcement of the abolition of the SDLT relief and the date that abolition would come into effect. 

2.5 However, the period between the closing of that consultation (19 May 2024) would not have provided sufficient time for regulations to be laid subject to the draft affirmative process to abolish the land transaction tax relief for the acquisitions involving multiple dwellings on 1 June 2024. When the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (the LTTA) was passed, the National Assembly for Wales provided the Welsh Ministers with a number of powers. One of these was the power to add, modify or remove a relief.  That power could have been used, but it would have meant the LTT rules coming in later than the SDLT rules, presenting less clear messaging for taxpayers buying in Wales and in England. 

2.6 Therefore, consideration was given to making regulations using the made affirmative procedure^[6] using the power in section 1 of the Welsh Tax Acts etc. (Power to Modify) Act 2022.  This would have provided the Welsh Ministers with the ability to make regulations to repeal the LTT MDR that could come into force on 1 June 2024 to match the date that the SDLT MDR was repealed. 

2.7 In the event a number of issues were raised through the consultation that meant that it was considered better to retain the relief but to modify it.  Subsequently two sets of regulations have been approved by the Senedd to modify how the MDR rules operate in February 2025^[7] and 2026^[8] reducing the tax benefits of the relief, thereby making the relief operate more fairly for other taxpayers and Welsh residents in general.   Those two sets of regulations were made using the power in section 30(6) of the LTTA^[9].

2.8 The reasons presented in the Explanatory Memorandum for the Welsh Tax Acts etc. (Power to Modify) Act 2022 and by the Cabinet Secretary for Finance, Constitution and Cabinet Office, Rebecca Evans MS, in Committee hearings or Plenary sessions remain valid.  Whilst there have not been any circumstances that have needed the power to be used, there is clearly the possibility that such events will occur in the future. 

^[3]Explanatory Memorandum, revised after stage 2.pdf

^[4]Predecessor taxes’ currently refers to Stamp Duty Land Tax and Landfill Tax – the UK equivalents for the taxes that are now devolved taxes in Wales.

^[5] Under section 118(1) Government of Wales Act 2006.

^[6] Welsh Tax Acts etc. (Power to Modify) Act 2022– see section 4(2)(b) which sets out the power to make regulations using the made affirmative (now Senedd confirmation procedure)

^[7] The Land Transaction Tax (Modification of Relief for Acquisitions Involving Multiple Dwellings) (Wales) Regulations 2025

^[8] The Senedd approved the Regulations on 10 February 2026

^[9] Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017

3.1 The consultation ran between 8 September and 28 November 2025 provided helpful insights and ideas.  The Welsh Government again expresses its thanks to those who responded. A consultation response document^[10], which should be read together with this document, was published on 13 February. 

3.2 Many of the respondents considered that the most appropriate approach was for tax changes to be made through primary legislation. This was a reflection of the fundamental and long held constitutional position and precedents that have developed over the years that form the basis of the UK constitution. 

3.3 However, most of the respondents also recognised that the position of the Senedd and Welsh Government was different from the UK government’s position because of the limited number of fully devolved taxes (just two at present; landfill disposals tax and land transaction tax) and that the funding of the Welsh Government can be altered through the decisions made by the UK government and Parliament in relation to its predecessor taxes^[11]. 

3.4 The consultation set out a number of approaches that could be taken to make changes, and these were listed (in a question) as:

a. an annual finance bill for Wales,

b. an annual (or less frequent) tax bill for Wales,

c. a new version of the Welsh Tax Acts etc. (Power to Modify) Act 2022, [or]

d. once the Welsh Tax Acts etc. (Power to Modify) Act 2022 has reached its sunset point to rely on the current regulation making powers and primary legislation as and when necessary

The consultation also explored issues that arose with each. These approaches, or the use of the approaches in combination, are considered to be, in relation to possible alternative approaches, the full extent of those options.   

3.5 The establishment of the devolved parliaments and the devolution of certain taxes to some of those parliaments created a significant new constitutional position for the smaller nations of the UK, and therefore for the UK itself.  Interestingly, one academic in response to the consultation felt it necessary to work through the reasoning as to why raising of taxes by the devolved legislatures was compatible with the UK constitution.  They concluded that it was indeed compatible with the UK constitution, a conclusion that would have been established by the UK government and Parliament when providing the legislation providing for the establishment of devolved taxes.  

3.6 One academic encouraged the Senedd and Welsh Government to be imaginative and not to be overly tied to the UK government and Parliamentary processes that had developed over many decades and centuries. In particular, they advocated not adopting a Provisional Collection of Taxes Act 1968 approach to making changes that have effect before the linked primary legislation has received Royal Assent. They further suggested that the need to bring tax changes into effect in advance of any primary legislation receiving Royal Assent was an approach that existed in the UK but was absent from approaches in some other countries. 

3.7 Heledd Fychan MS in the debate on my Oral Statement on 16 September 2025 raised the possible lessons that can be learned from the arrangements in the Basque Country.  This is a source of potential lessons for Wales and will need to be explored. However, those arrangements will be complex, based on a different legal and constitutional basis to the current devolution settlement for Wales and specific to the history of the Basque Country. There are some similarities in that there are ‘agreed tax subject to autonomous legislation’ and ‘agreed tax subject to State legislation’ (which are potentially equivalent to our devolved and reserved taxes). Such consideration will also require a full understanding not only of the legislative processes in the Basque and Spanish Parliaments but also the operation of the Economic Agreement between the Autonomous Community of the Basque Country and the Spanish central government. Such work can be undertaken if the next Welsh Government wishes to explore this area further. 

^[10] Making changes to the Welsh Tax Acts consultation

^[11] The predecessor taxes are landfill tax, replaced in Wales by landfill disposals tax, and stamp duty land tax, replaced in Wales by land transaction tax.

4.1 The original reasons underlying the Welsh Government’s rationale for the power provided in the Welsh Tax Acts etc. (Power to Modify) Act 2022 remain.  The possibility of the UK government making changes using Provisional Collection of Taxes Act 1968 resolutions continues to be very real.  It remains important that the Welsh Government is able to respond timeously, both to protect revenues and, where appropriate, to reduce the tax burden on taxpayers.

4.2 This has proven to be especially relevant for land transaction tax rates and thresholds.  There have been a number of changes made since the Senedd first approved the rates and thresholds in advance of the devolved taxes ‘going live’ in April 2018.  These changes were made using the made affirmative procedure as provided by the National Assembly for Wales in the Land Transaction Tax and Anti-avoidance of Devolved Taxes Act (Wales) 2017; and all tax changes were subsequently approved by the Senedd. 

4.3 The changes to the rates and thresholds fall into two broad camps; those in response to UK government changes to stamp duty land tax, and those introduced by the Welsh Government to meet its policy objectives.  An example of the former is the temporary LTT tax reduction period introduced in July 2020 that was in response to the SDLT ‘holiday’. Another example is the increase in the LTT higher residential rates to broadly match the SLDT surcharge element that was changed in late 2024 (to broadly follow the UK government’s 5% surcharge).  The introduction of a temporary LTT tax reduction period was introduced following the SDLT holiday to provide early certainty to Welsh taxpayers and ensure the smooth operation of the Welsh housing market, ensuring buyers did not delay their transactions in the hope or expectation that LTT would be reduced in the near future.   For the latter, LTT changes made in December 2020^[12] included both a tax increase for those taxpayers liable to the higher residential rates (providing, broadly, an LTT 4% surcharge), and also a tax reduction for those paying the non-residential rates. 

4.4 I consider that the power to make regulations to effect immediate changes to the Welsh devolved taxes rates (and for LTT thresholds too) is essential, especially as it permits the Welsh Government to introduce changes when the Senedd is not sitting, when necessary. The proportionate and timely approach taken by this Welsh Government on a number of occasions is considered to demonstrate the need for this ability.  Therefore, whatever approach the next Senedd chooses to take to making changes more broadly to the Welsh Tax Acts, I would strongly advocate that these powers (and the procedure for making them through Senedd confirmation) are retained. 

4.5 Other changes using other secondary powers provided to the Welsh Ministers by the National Assembly for Wales in the Welsh Tax Acts have also been made at the most appropriate time.  In landfill disposals tax, amendments by regulations in October 2016 and July 2019 to site restoration and refilling opencast mines and quarries reliefs enabled essential work to be commenced timeously. Likewise, for LTT, the use of the power to make, modify or remove reliefs, has been used to not only introduce the special tax sites relief and provide relief to first Welsh Freeport, it has also been used to provide relief to other special tax sites as and when those sites are ready to start operating.   The regulations have been made in November 2024, January 2025, and a further two sets in November 2025.  I would again advocate that the next Welsh Government and Senedd retain these, and other secondary powers provided in the Welsh Tax Acts to enable our citizens and businesses to benefit from timeous changes can be made to ensure the stability of our developing tax system. 

4.6 Consideration then is required to the place of the power provided to the Welsh Minsters by the Welsh Tax Acts etc. (Power to Modify) Act 2022 within that suite of powers.   The review of the use of the power is relatively easy on the basis that it has not yet been used.  However, as set out earlier, consideration has been given to its use.  That indicates that the purposes for which the power can be used exist not only in the past, as detailed in the consultation documents published in relation to this issue in 2020^[13] (and response^[14]) and 2025^[15] and the Explanatory Memorandum^[16] for the Act and other details provided to the Senedd, but also into the future.  The provision of the power remains appropriate to enable a future Welsh Government, subject to the Senedd’s approval of those regulations, to address unexpected external events that can have significant impacts for our devolved taxes.       

4.7 The Welsh Government and the Welsh Revenue Authority undertook a consultation on legislative proposals relating to the Welsh Tax Acts^[17] which closed on 26 January 2026.  That consultation listed a number of potential changes to the Welsh Tax Acts that are being explored and have arisen from the experiences of the Welsh Revenue Authority since 2018 and have been raised separately by tax professionals. The potential Tax Maintenance Bill, should the next Welsh Government choose to introduce it, will provide some helpful experience of a Finance/Tax Bill making a broad range of changes across the Welsh Tax Acts.  As a standalone Bill, it cannot be considered to be the end point in seeking the alternative mechanisms for making changes to the Welsh Tax Acts.  It will make changes to the Welsh Tax Acts through a Bill, but as none of the areas proposed need to come into force prior to the Bill receiving Royal Assent, and in any case in many cases there is no mechanism to give effect to them, the earliest the changes will have effect will be the day of, or day after Royal Assent.  Similarly, the procedure the Bill will follow will be the same as those for all Bills in the Senedd, when it may be appropriate in future for special rules to apply as there are for UK Finance Bills. 

4.8 In discharging the duty to review the operation and effect of the Welsh Tax Acts etc. (Power to Modify) Act 2022 I am required to assess alternative legislative mechanisms for making changes to the Welsh Tax Acts and regulations made under any of those Acts. The options we have considered are set out in paragraph 3.4.

4.9 All four options are for the next Senedd and Welsh Government to consider.   

Renewing the Welsh Tax Acts etc. (Power to Modify) Act 2022

4.10 It is clear from the passage of the Welsh Tax Acts etc. (Power to Modify) Act 2022 through the Senedd that a significant number of current Senedd Members of all parties had concerns at the absence of an opportunity to amend the tax legislation that they approve.  The next Senedd may feel equally strongly.  Therefore, the next Welsh Government and Senedd may wish to consider developing a process for changes to be made through primary legislation.  As such, I consider that a new version of the Welsh Tax Acts etc. (Power to Modify) Act 2022, by itself, will not be an appropriate future mechanism due to the likely lack of support within the Senedd. 

4.11 Each of the other three approaches have their own advantages and potential disadvantages.  Previous consultations undertaken by the Welsh Government in 2020 and 2025 have set out the arguments in favour and against the finance and tax bill approaches.  I consider them to still be valid today.  The 2020 and 2025 consultations addressed many of the advantages and disadvantages that arose from a Welsh annual finance or tax bill and the complexities when used to meet a change to a predecessor tax, and the appropriateness for such an approach has been addressed several times in the Senedd when regulations amending the Welsh Tax Acts have been debated.   

An Annual Finance Bill

4.12 I do not consider that an annual finance bill process is appropriate for Wales at this time. An “annual finance Bill” is a Bill that modifies tax legislation, but the timing of making that Bill is tied into the Budget cycle. In the UK Parliament, annual Finance Acts are required in order to renew certain powers that expire at the end of each tax year (e.g. power to levy income tax). This is not the case in Wales: land transaction tax and landfill disposals taxes do not expire every year. Also, as we only have a very limited range of taxes as compared to the UK (and so comparatively limited means of raising funds by way of taxation). I do not think there is a strong need for a Tax Bill each year to be tied so closely to the annual Budget cycle. Also, an annual bill may not be needed given the number of changes that are likely to arise for our taxes.

A Tax Bill when required

4.13 A Tax Bill as and when needed would allow the government more flexibility. A fixed annual cycle would be too rigid and cause problems if there is a policy desire or need to respond to any changes made to the “predecessor taxes” (i.e. SDLT and landfill tax) that is not compatible with the annual finance Bill – or to make other changes to tax legislation that do not need to be tied into the Budget cycle. Even with this level of flexibility, there may be scenarios where this is unworkable, for example where the effectiveness of a policy is dependent on a change being implemented as quickly as possible or without notice (or on extremely short notice).

4.14 The next Welsh Government and Senedd could decide to return to the position that existed before the Welsh Tax Acts etc. (Power to Modify) Act 2022 came into force. That would mean that if a change was considered necessary, the existing regulation making powers could be used to effect the change, subject to Senedd approval, or a Bill could be introduced where the powers were not available. The Welsh Government and the Senedd recently passed the Mental Health Review Tribunal for Wales (Membership) Act 2026 within a matter of days from introduction to it coming into force (13 January 2026 - 22 January 2026) indicating the speed at which the Welsh Government and Senedd can achieve changes though primary legislation; but we cannot predict the extent and nature of all political and practical pressures on Senedd business in the future and it seems wise in that case to make provision for all possible eventualities.

4.15 As I have sought in many of my decisions, I consider that a reasonable and pragmatic approach to this issue should be sought at this stage in our devolution journey.  For me, that will mean finding a balance between the competing needs and pressures.  I believe that it is important that future Welsh Ministers, just as the Welsh Ministers of this and past Welsh Governments have done, can respond to situations as they arise to protect or enhance our revenues or to provide tax reductions for our citizens and businesses. In many cases the current powers (provided by the National Assembly for Wales in the respective Welsh Tax Acts) have enabled us to respond and achieve our objectives.  I consider this to have worked well. They have ensured that changes have been made timeously ensuring, for example, that our landfill site operators could commence remedial work early and at the right time, that our freeports and investment zone were provided with LTT relief on the date they were designated, and that changes to our tax rates and bands could be made when required (both to meet Welsh Government policy, and to provide stability to our housing market when changes are made to stamp duty land tax).

A Hybrid Approach

4.16 Nevertheless, I consider that there is a further approach, over those outlined previously, that could be considered. A scheme similar to that of the Provisional Collection of Taxes Act 1968 (PCTA) or section 109 of the Finance Act 2003 would in many cases strike an appropriate balance i.e. a scheme whereby amendments to legislation are made by regulations or a motion and come into effect immediately, but cease to have effect at the end of a fixed period unless included in an Act of the Senedd that is introduced before the end of that period. 

4.17 It would combine the advantages of both primary and secondary legislation; a ‘hybrid’ approach for the stage we are at in our tax devolution journey.  Such a hybrid approach could be one that seeks to provide the necessary flexibility to the Welsh Ministers by conferring on them the power to make regulations, having a temporary effect and subject to Senedd approval, that can make changes to the Welsh Tax Acts for situations were urgent changes are required  for which primary Welsh tax legislation may be amended currently by regulations under section 1 of the Welsh Tax Acts etc. (Power to Modify) Act 2022. Consideration could also be given to whether the same approach should be applied to other current powers to amend primary Welsh tax legislation by secondary legislation. The new regulation making power would be subject to a sunset provision, which would have the effect of requiring temporary changes made by the regulations to be continued in effect by Senedd Bill after the end of the sunset period, if there is a policy desire to retain the changes.    This will have two advantages. Firstly, legislation will reflect the temporary changes made providing a significantly more transparent approach than is provided by a Provisional Collection of Taxes Act route (which sets out tax changes in a parliamentary motion).  Secondly, the sunset clause and requirement for the changes to be confirmed or amended by a Bill will provide Senedd scrutiny opportunities to confirm or enhance the legislation. 

4.18 What period the sunset provision should run , what regulations the sunset provision should apply to (only those made under any replacement for section 1 of the 2022 Act or, perhaps even  other Welsh tax regulations that amend primary legislation, including those under established regulation making powers), and what other changes can be made, will be for the next Senedd and Welsh Government to develop.  Additionally, consideration will need to be given to whether a bespoke bill process is required for bills that seek to confirm or amend amendments made to primary Welsh tax Acts by regulations that are subject to sunset provisions. 

4.19 An example may help to illustrate the sort of arrangements that could emerge on the assumption that a power is provided by the Senedd to the Welsh Ministers to introduce changes to the Welsh Tax Acts over those that currently have been provided and that the new power has a sunset provision. It will be for the next Welsh Government and Senedd to consider what period is appropriate for the sunset provision but it could be 12, 18, 24 or even 36 months, that is a Bill must be introduced within 12, 18, 24 or 36 months of the regulations coming into force or the changes effected cease to have effect. Using a 24-month sunset provision this could provide the following timeline:

• 1 March 2028 Welsh Ministers confirm changes considered necessary (with or without consultation, depending on circumstances),
• 14 March 2028 made regulations laid before the Senedd using the Senedd confirmation procedure,
• 4 April 2028 regulations confirmed by the Senedd,
• 1 December 2029 Bill introduced into the Senedd (around 18 months after the 14 March 2028 regulations made), including these changes, those made under the same power on 1 November 2028 and 1 July 2029, together with other changes that can be introduced thorough the Bill. 
• Bill passes through its stages and is passed by the Senedd on 22 July 2030 and receives Royal Assent on 5 September 2030. 

          This will effectively provide rules that is likely to require at least one tax bill each Senedd term.

Extension to the end date to use the power to make regulations under the Welsh Tax Acts (Power to Modify) Act 2022

4.20 The next Senedd and Welsh Government will need time to develop the appropriate mechanisms for making changes to the Welsh Tax Acts, it is a decision ultimately for them. I consider, however, that the opportunity should be taken to provide an extension to the section 1 Welsh Tax Acts etc. (Power to Modify) Act 2022 power.   The Act provided a single opportunity for the sunset clause end date to be extend, and a maximum end date to that extension - 30 April 2031. I intend to lay regulations (subject to the Senedd approval procedure) to provide that extension so that the new Senedd and Welsh Government can use the section 1 power in the event one of the four external events occur before the new mechanisms have been created. 

^[12] Changes to the rates and bands of Land Transaction Tax 2022

^[13] enabling-changes-to-welsh-tax-legislation-consultation-document.pdf

^[14] enabling-changes-to-the-welsh-tax-acts-summary-of-response.pdf

^[15] Views on the Appropriate Mechanisms for Making Changes to the Welsh Tax Acts

^[16] Explanatory Memorandum, revised after stage 2.pdf

^[17] Legislative proposals relating to the Welsh Tax Acts White Paper