Welsh income tax is only payable by Welsh taxpayers.
There are a number of tests to determine Welsh taxpayer status. Place of residence is key to establishing whether an individual is a Welsh taxpayer. For the vast majority of individuals, the question of whether or not they are a Welsh taxpayer will be a simple one – they will either live in Wales and be a Welsh taxpayer or live elsewhere in the UK and not be a Welsh taxpayer.
Welsh income tax applies to non-savings, non-dividend income only (earnings, pension and most other taxable income). Welsh taxpayers pay the same tax as the rest of the UK on savings and dividends income.
- The Welsh rate of income tax was introduced through the Wales Act 2014.
- From April 2019, the Welsh Government has the power to set income tax rates applicable to non-savings and non-dividend income to those defined as Welsh taxpayers.
- Welsh taxpayer status applies for a whole tax year and cannot be applied for part of a year.
- Reliefs and allowances, such as Personal Allowance, are not devolved and remain set by the UK government.
- Welsh residence is determined by where the main home of the individual is situated or by counting the number of days an individual is resident in Wales.
- The three rates, basic, higher and additional remain at 10 pence for 2022/23 under the draft 2022/23 budget. Welsh taxpayers continue to pay the same rates as their English & Northern Irish counterparts.