From April 2019, the Welsh Government will be able to vary the rates of Income Tax paid by Welsh taxpayers.
Setting Welsh rates of income tax
In April 2019, the UK government reduced the 3 rates of Income Tax paid by Welsh taxpayers as illustrated in the below diagram: Each year, the Welsh Government decides the Welsh rates of income tax which are added to the reduced UK rates; choosing to vary these rates, or keep them the same as those paid by English and Northern Irish taxpayers.
The Senedd has agreed the proposed Welsh rates of income tax for 2023 to 2024 which means there will be no change to overall income tax rates for taxpayers in Wales.
How your tax is collected
Income Tax from Welsh taxpayers is collected by His Majesty’s Revenue and Customs (HMRC).
The amount of money people can earn before they start paying tax (their personal allowance) is the same as it is for the rest of the UK. The personal allowance amount can vary based on individual circumstances.
There are 3 tax bands: basic, higher and additional. The point at which people start to pay the higher and additional rates of Income Tax is the same as England and Northern Ireland.
Responsibility for taxing income from savings and dividends will remain with the UK government.