What is the Welsh rate of income tax (WRIT)?

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From April 2019 the Welsh Assembly will be able to vary the rates of income tax paid by Welsh taxpayers.

Welsh taxpayers will have UK rates cut by 10p in the pound, and will then pay an additional Welsh rate, set by the Welsh Assembly. Money raised by the Welsh portion of the new rates will go to the Welsh Government.

To help you understand how the WRIT will affect you, here are some of the most common questions and answers.

HM Revenue & Customs (HMRC) is responsible for identifying who is a Welsh taxpayer. They're doing this by looking to determine whether a taxpayer has a close connection with Wales.

For most people, if your primary residence is in Wales, or if you live in Wales for more than half the year, you’ll be considered a Welsh taxpayer. 

For more information visit gov.uk/welsh-income-tax(Opens new window).

HMRC has written to everyone they consider to be a Welsh taxpayer. This was done during November 2018.

From 6 April 2019, you'll have a 'C' prefix added to your tax code if you're a Welsh taxpayer and you have employment or pension income taxed under Pay As You Earn (PAYE).

You won't need to do anything as long as HMRC have your current address details. You can advise HMRC of a change of address by visiting gov.uk/tell-hmrc-change-of-details(Opens new window).

HMRC is writing to everyone they consider a Welsh taxpayer, based on the current address information it holds. 

You should contact HMRC if you don't receive a letter but think you're a Welsh taxpayer.

Where your employer is based has no bearing on the rate of income tax you pay. 

Whether or not you're a Welsh taxpayer normally is based on your primary residence, so if you live outside Wales it's unlikely you'll be a Welsh taxpayer.

Where your pension provider is based has no bearing on the rate of income tax you pay. 

Whether or not you're a Welsh taxpayer is normally based on your primary residence, so if you live outside Wales it's unlikely you'll be a Welsh taxpayer.

If your primary residence is normally in Wales it's likely you'll be a Welsh taxpayer, however for some people it can be more complex. 

For more information about how HMRC are identifying Welsh taxpayers visit gov.uk/welsh-income-tax(Opens new window).

You should let HMRC know your new address details straightaway. They'll review your tax position so you pay the correct amount of tax.

The Welsh Government has indicated it won’t increase income tax rates for the duration of the current Assembly, which is due to continue until May 2021, therefore we don’t expect rates for the tax year 2019/20 to be different from those paid in England and Northern Ireland. However, this will be confirmed in the Welsh Autumn Budget statement, expected in December 2018.

No. The Welsh Government doesn’t currently have the power to change tax bands, so the bands that apply for English and Northern Irish taxpayers will also apply to Welsh taxpayers.

We’ll use the tax code supplied by HMRC. If you're a Welsh taxpayer, your tax code will have a C prefix and we'll deduct income tax at Welsh rates. Until we have a tax code from HMRC, we’ll use the UK emergency tax code and deduct tax at England and Northern Ireland rates, according to HMRC guidance.

We’ll use the tax code supplied by HMRC. If you're a Welsh taxpayer, your tax code will have a C prefix and we'll deduct income tax at Welsh rates. Until we have a tax code from HMRC, we’ll use the UK emergency tax code and deduct tax at England and Northern Ireland rates, according to HMRC guidance.

We'll continue to apply the UK basic rate of income tax to payments from uncrystallised funds, according to HMRC guidance. If the amount of tax you pay is incorrect, HMRC will contact you at the end of the tax year.

Once the Welsh rates of income tax are introduced, personal contributions made to personal pension schemes which operate under the relief at source method will have tax relief added at the Welsh basic rate. As this will be 20% for the tax year 2019/20, there’ll be no change to how you receive tax relief on your pension contributions at this time.

If you pay more than your annual allowance into your pension savings in a tax year, you may need to pay a tax charge. The excess would be added to your taxable income and charged at your marginal rate of income tax – so this would be calculated using Welsh rates if you’re a Welsh taxpayer.

Tax on savings will continue to be payable at the appropriate UK rates.

HMRC will continue to be responsible for making sure everyone pays the correct amount of income tax. 

If you think you're paying the incorrect rate of tax because you've been incorrectly classed as a Welsh taxpayer (or otherwise), you should contact HMRC directly.


More questions for employers

Employees classed as Welsh taxpayers will need to pay income tax at Welsh rates.

If their primary residence is in Wales it's likely they'll be a Welsh taxpayer, however for some people it can be more complex. For more information about how HMRC are identifying Welsh taxpayers visit gov.uk/welsh-income-tax(Opens new window).

You'll need to make sure that your payroll system can recognise the 'C' prefixed tax codes so that any employees who are Welsh taxpayers pay the correct amount of tax. Please contact HMRC and/or your payroll provider for more information.