Welsh Tax Rates 2019/20

We are starting to see some information being published about the proposed tax rates changes to those people who are classed as living in Wales.

From April 2019, the Welsh Government will set the rate of income tax for Welsh resident taxpayers but this will continue to be collected by HMRC. This means that people living in Wales could pay a different rate of Income Tax compared to people in other parts of the UK. From April 2019, Welsh resident taxpayers employed or in receipt of a pension will have a tax code beginning with C. Those completing a Self Assessment tax return online will be asked about country of residence on their return.

The UK government will reduce each of the 3 rates of income tax – basic, higher and additional rate – paid by Welsh taxpayers by 10p. The Welsh Government will then decide the 3 Welsh rates of income tax, which will be added to the reduced UK rates. The combination of reduced UK rates plus the Welsh rates will determine the overall rate of income tax paid by Welsh taxpayers.

The personal allowance – the amount people can earn before they start paying tax – will continue to be the same as it is in England, Northern Ireland and Scotland. The point at which people start to pay the higher and additional rates of income tax will stay the same as in England and Northern Ireland.

Based on the information to date, it would appear that the changes above will be applied to PAYE, ie., it will impact on the tax code download, PAYE calculations and submissions to HMRC for RTI.  There is no suggestion at this stage that these changes will also follow through and impact on Relief At Source (RAS).

We will therefore be assessing the changes required to both SIPP~Pro and SSAS~Pro to ensure that we deliver these in our tax year end release for March 2019.  Exact details of the schema changes for RTI have yet to be released – these are usually issued during the last third of the calendar year and we will provide more information when these become available.

Reference Source:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/715475/Employer_Bulletin_June_2018.pdf

https://gov.wales/funding/fiscal-reform/welsh-taxes/income-tax/?lang=en

https://gov.wales/docs/caecd/publications/180608-income-tax-faqs-en.pdf