Welsh rates of Income Tax

Since 6th April 2019, Welsh rates of Income Tax have been determined by the Welsh government instead of England’s. This means that the two are no longer automatically aligned. It’s similar to the set up of the Scottish system. 

For the 2024/25 tax year, the rates are the same as for England, but this is subject to change every year:

• Personal Allowance: your first £12,570 are tax-free
• Basic rate: 20% between £12,570 and £50,270
• Higher rate: 40% between £50,271 and £125,140
• Additional rate: 45% above £125,141

Why did the Welsh rates of Income Tax change?

Income Tax paid by Welsh residents now goes straight to the government in Wales, rather than via the government in England. The rates are set in the Welsh government’s annual draft budget in the autumn. They apply to non-savings and non-dividends earnings. For savings and dividends earnings, these are still taxed under the main UK rates.

Do I pay twice?

No. You will never have to pay both England and Welsh Income Tax on your earnings. You’ll always be taxed on either one or the other.

How do I pay Welsh Income Tax?

You will pay either via the PAYE system (which means direct from your salary) or via a Self Assessment if you’re earning untaxed income. 

You’ll owe Income Tax on the following types of income:

• Self-employed income
• Rental income
• Pension income
• Employed salary income
• Any taxable benefits

How does it work for CIS workers?

As a CIS worker, you’ll pay Welsh rates of Income Tax on your CIS earnings – but the deductions (either 20% or 30%) will be made aligning with the main UK system.

The Welsh rates will therefore affect the tax you owe and the rebate you’ll be eligible for. That said, in the 2024/25 tax year, the UK and Welsh rates are the same, so there will be no difference in either what you pay or what you have returned.