Beginning 6th April 2019, Wales embarked on a new fiscal journey with the introduction of Welsh rates of Income Tax, distinct from those set in England. This move granted the Welsh government autonomy to tailor Income Tax rates to better fit Wales' needs, mirroring the Scottish model of tax autonomy.
Welsh Income Tax Rates for the 2023/24 Tax Year
For the tax year 2023/24, the Welsh Income Tax rates align with those of England, although future adjustments are within the Welsh government's prerogative:
- Personal Allowance: The initial £12,570 of income remains untaxed.
- Basic Rate: Income between £12,570 and £50,270 is taxed at 20%.
- Higher Rate: Earnings between £50,271 and £125,140 incur a 40% tax.
- Additional Rate: Income exceeding £125,141 is subject to a 45% tax rate.
The Rationale Behind Welsh Income Tax Autonomy
This shift ensures that Income Tax generated from Welsh residents directly contributes to Wales's budget, reinforcing financial independence and accountability. The Welsh government determines these rates during its annual budget draft each autumn, applying to non-savings and non-dividends income. UK-wide rates still apply to savings and dividends income.
Taxpayer Guidance
Welsh taxpayers won't face double taxation; they are subject to either English or Welsh Income Tax, but not both. Payment methods remain unchanged, through PAYE for employed individuals or Self Assessment for those with untaxed income, covering various income types from self-employment to pension earnings.
Implications for CIS Workers
CIS workers in Wales are subject to Welsh Income Tax rates on their earnings, with deductions made according to UK standards. For the 2023/24 fiscal year, given the alignment of rates between Wales and the rest of the UK, CIS workers will see no difference in their tax payments or rebates.
