[UK] Welsh Rates of Income Tax 2020/21

The Global Payroll Association is aware that professionals have been frustrated by the lack of information and certainty regarding all of the rates and thresholds that we would normally have by this time in the year.  This is rates and thresholds that apply for things such as tax and National Insurance.

So, it was good to read the Welsh draft Budget that was presented on the 16^th of December 2019.  Both the draft Budget Narrative (on page 3) and the Welsh Tax Policy Report 2019 confirm that the Welsh Rates of Income Tax (WRIT) will remain unchanged in 2020/21.  So, like 2019/20, the rates that apply in countries other than Scotland will be reduced by 10 percentage points and 10 percentage points will be added back on.  

Whilst this has no impact on the amount of tax that is paid by an individual, the partial devolution of income tax means that it has a significant effect on Wales, with money from the 10p in the pound going directly to Wales rather than via Westminster.

Global Payroll Association Comment

As we have said, the way that the Welsh Rates of Income Tax work at the moment makes no difference to the amount of tax paid.  But it does make a difference to the way that the income tax is allocated by HMRC.  We are aware that there are some individuals who are Welsh taxpayers who do not have a “Welsh” tax code that starts C.

Whilst it is not an employer responsibility at all and is, possibly, a fault of HMRC for not issuing the correct tax code, we urge employers to look at their workforce.  Possibly, a tax code has been issued and it has not been implemented.  Or, maybe it is the software that is not operating the tax code correctly.  This will be difficult to tell, as the calculation for a Welsh taxpayer and someone in the rest of the UK will be the same.  We have even heard of software that is operating Scottish tax for Welsh taxpayers!

Whilst 2020/21 looks from the draft Budget to be another year when tax rates will not change for Welsh taxpayers, this does not mean that they will not change in the future.  Time for some housekeeping and, perhaps, getting individuals to access their Personal Tax Account and update their address information.

The Global Payroll Association is aware that professionals have been frustrated by the lack of information and certainty regarding all of the rates and thresholds that we would normally have by this time in the year.  This is rates and thresholds that apply for things such as tax and National Insurance.

So, it was good to read the Welsh draft Budget that was presented on the 16^th of December 2019.  Both the draft Budget Narrative (on page 3) and the Welsh Tax Policy Report 2019 confirm that the Welsh Rates of Income Tax (WRIT) will remain unchanged in 2020/21.  So, like 2019/20, the rates that apply in countries other than Scotland will be reduced by 10 percentage points and 10 percentage points will be added back on.  

Whilst this has no impact on the amount of tax that is paid by an individual, the partial devolution of income tax means that it has a significant effect on Wales, with money from the 10p in the pound going directly to Wales rather than via Westminster.

Global Payroll Association Comment

As we have said, the way that the Welsh Rates of Income Tax work at the moment makes no difference to the amount of tax paid.  But it does make a difference to the way that the income tax is allocated by HMRC.  We are aware that there are some individuals who are Welsh taxpayers who do not have a “Welsh” tax code that starts C.

Whilst it is not an employer responsibility at all and is, possibly, a fault of HMRC for not issuing the correct tax code, we urge employers to look at their workforce.  Possibly, a tax code has been issued and it has not been implemented.  Or, maybe it is the software that is not operating the tax code correctly.  This will be difficult to tell, as the calculation for a Welsh taxpayer and someone in the rest of the UK will be the same.  We have even heard of software that is operating Scottish tax for Welsh taxpayers!

Whilst 2020/21 looks from the draft Budget to be another year when tax rates will not change for Welsh taxpayers, this does not mean that they will not change in the future.  Time for some housekeeping and, perhaps, getting individuals to access their Personal Tax Account and update their address information.