New devolved Welsh rates of income tax to come into force next year New devolved Welsh rates of income tax to come into force next year

New devolved Welsh rates of income tax to come into force next year
05 Dec 2018

Her Majesty’s Revenue & Customs (HMRC) has written to two million taxpayers in Wales to inform them of the introduction of the new Welsh rates of income tax (WRIT) next year.

From 6 April, the Welsh Government will set its own income tax rates and taxpayers will receive a new tax code, starting with ‘C’ for Cymru. 

Angela MacDonald, director general for HMRC’s customer services, told Accountancy Daily: "We want to help people pay the right tax so we’re writing to customers to let them know that they’ll now be paying WRIT. Customers don’t need to do anything right now but should make sure to keep HMRC informed if their details change in the future."

Income tax will continue to be collected from pay and pensions through PAYE and Self Assessment in the same way as it is now. But around £2 billion (US$2.25 billion) of the total tax raised will go directly to the Welsh Government, which will have the power to increase or decrease rates as it sees fit.

Trefor Owen-Jones, a chartered financial planner at Charles Derby, told the Daily Post that Scotland was already benefiting from such powers and had reduced the starting rate of tax to 19% for the first £2,000 (US$2,247) of tax payable. It then decided to charge an extra 1% for anyone earning over £24,000 (US$26,969).

“In Scotland, this was expected to raise an additional £164 million, which was to be spent on increased NHS spending and public servants’ salaries,” he said. “It is likely in future years that the Welsh government will do something similar.”

But Owen-Jones added that nearly 80% of Welsh Government spending would still come directly from the UK Government “so the impact of the freedoms given to raise or reduce tax will always be limited in what it can achieve".

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER ARTICLES THAT MAY INTEREST YOU

A guide to Welsh taxation from April 2019

The UK and Crown Dependencies: Understanding the tax difference

UK payroll changes continue to pile up well into 2019

 

 

Her Majesty’s Revenue & Customs (HMRC) has written to two million taxpayers in Wales to inform them of the introduction of the new Welsh rates of income tax (WRIT) next year.

From 6 April, the Welsh Government will set its own income tax rates and taxpayers will receive a new tax code, starting with ‘C’ for Cymru. 

Angela MacDonald, director general for HMRC’s customer services, told Accountancy Daily: "We want to help people pay the right tax so we’re writing to customers to let them know that they’ll now be paying WRIT. Customers don’t need to do anything right now but should make sure to keep HMRC informed if their details change in the future."

Income tax will continue to be collected from pay and pensions through PAYE and Self Assessment in the same way as it is now. But around £2 billion (US$2.25 billion) of the total tax raised will go directly to the Welsh Government, which will have the power to increase or decrease rates as it sees fit.

Trefor Owen-Jones, a chartered financial planner at Charles Derby, told the Daily Post that Scotland was already benefiting from such powers and had reduced the starting rate of tax to 19% for the first £2,000 (US$2,247) of tax payable. It then decided to charge an extra 1% for anyone earning over £24,000 (US$26,969).

“In Scotland, this was expected to raise an additional £164 million, which was to be spent on increased NHS spending and public servants’ salaries,” he said. “It is likely in future years that the Welsh government will do something similar.”

But Owen-Jones added that nearly 80% of Welsh Government spending would still come directly from the UK Government “so the impact of the freedoms given to raise or reduce tax will always be limited in what it can achieve".

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER ARTICLES THAT MAY INTEREST YOU

A guide to Welsh taxation from April 2019

The UK and Crown Dependencies: Understanding the tax difference

UK payroll changes continue to pile up well into 2019

 

 

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