Welsh rates of income tax (WRIT) will be introduced for the first time from April 2019, confirmed the Welsh government in its Draft Budget 2018-2019 outline proposals report.
Similar to the Scottish rate of income tax, the UK government will reduce each of the three income tax rates for UK taxpayers who are resident in Wales by 10p. Welsh Ministers will then propose and vote on the WRIT to be applied in addition to the reduced UK rates.
The partial devolution of income tax is provided for in the Wales Act 2014. The UK government will continue to control the setting of the personal allowance, setting the income thresholds at which the tax rates will apply and the taxation of income from savings and dividends. HMRC will also continue to collect income tax and will direct the appropriate WRIT revenues to the Welsh government.
The Welsh government has committed not to increase income tax in Wales during this Assembly term. It has assumed that there is no net budgetary impact from the introduction of WRIT – the revenues from it will be offset by the reduction in the block grant.
