What are the 2022-23 income tax rates in Wales?
The National Assembly for Wales has the devolved power to set different income tax rates for its taxpayers. This doesn’t apply to income from savings or dividends. Only individual people can be Welsh taxpayers, not companies.
Is anything different in 2022-23 tax year for Wales?
We know that the Chancellor has maintained the same £12,570 Personal Allowance amount for the whole of the UK. National Insurance Contributions are also unaffected by your status as a Welsh income taxpayer.
For the 2022-23 tax year, the Welsh Assembly has decided to stay in line with the income tax rates that govern England and Northern Ireland. They are:
- Income under £12,570: 0% income tax, this is your tax free Personal Allowance
- Income between £12,571 and £50,270: 20% Basic Rate
- Income between £50,271 and £150,000: 40% Higher Rate
- Income over £150,000: 45% Additional Rate
This is exactly the same as the 2021-22 tax year. And it’s staying the same until the end of the 2025-26 tax year.
HMRC reduces the amount of income tax payable by Welsh taxpayers by 10% and the Welsh government decide what percentage exists instead. For example, the 20% Basic Rate of tax becomes:
- 10% payable to HMRC
- 10% reduction by HMRC
- Welsh government currently adds the 10% that keeps it at total rate of 20%
But they can decide to make that 10% figure lower or higher. For example: Increase it to 12%, taking the total to 22% Basic Rate Tax. Or cut it to 9%, making the total Basic Rate 19%. This decision is taken annually by the Welsh Assembly.
How do I know I’m a Welsh Taxpayer?
If you’re an employee, your tax code will have the prefix ‘C’. This stands for Cymru, which means Wales in Welsh. If you live and work in Wales all the time, then you’re a Welsh taxpayer.
There are slightly more complex situations, like if you move to Wales during a tax year. HMRC prefer to keep it simple and start by looking at how many days you spent in Wales or another part of the UK. If you spent more time in Wales, you’re a Welsh taxpayer.
You can’t choose to be a Welsh taxpayer because you were born there, or identify as Welsh because of your family heritage.
The main deciding factor for HMRC is your main residence. If that’s in Wales, then you’ll pay the Welsh income tax rates. It’s nothing directly to do with your employer, pension provider or location of work.
All you need to do is make sure that HMRC has your correct address, and they will make sure that you’re in the right income tax classification. And tick the ‘Welsh taxpayer’ box on your self assessment tax return.