Welsh Rates of Income Tax

Since April 2019, the Welsh Government has had the power to set the rates of Income Tax for Welsh taxpayers on non-savings, non-dividend income (employment, self-employment, pensions, and rental income). Savings and dividend income are taxed at UK-wide rates regardless of where you live. The Welsh Rates of Income Tax (WRAIT) apply to Welsh taxpayers and are collected by HMRC alongside UK-wide taxes. This guide explains the Welsh rates, who is a Welsh taxpayer, and how the system differs from the rest of the UK.

Who Is a Welsh Taxpayer

You are a Welsh taxpayer if your main place of residence is in Wales. HMRC determines this based on where you live for the majority of the tax year. If you live in Wales for at least part of the year, you may be a Welsh taxpayer for the whole year. Your employer uses a special tax code prefix — a C before your tax code (for example, C1257L) — to indicate that Welsh rates apply. If you move between Wales and another part of the UK during the tax year, your Welsh taxpayer status depends on where you live on the relevant date. The rules are broadly similar to the Scottish taxpayer rules but the rates are different. If you are unsure whether you are a Welsh taxpayer, check your personal tax account or call HMRC.

Welsh Income Tax Rates (2026/27)

For the 2026/27 tax year, the Welsh rates of Income Tax are aligned with the UK rates for England and Northern Ireland. The Welsh basic rate is 20%, the Welsh higher rate is 40%, and the Welsh additional rate is 45%. The Welsh Government has the power to vary these rates by up to 10 pence in the pound, but to date it has chosen to keep them in line with the UK rates. This means that, in practice, Welsh taxpayers pay the same rates of Income Tax on their earned income as taxpayers in England and Northern Ireland. The key difference is that the rates are set by the Welsh Parliament (Senedd Cymru) rather than the UK Parliament, and the revenue from Welsh rates is allocated directly to the Welsh Government's budget.

How Welsh Tax Differs from Scotland

Unlike Scotland, Wales has not introduced separate tax bands — the Welsh rates apply to the same income bands as England and Northern Ireland. There is no separate Welsh starter rate, intermediate rate, or top rate. The Welsh basic rate of 20% applies to taxable income between £12,571 and £50,270. The Welsh higher rate of 40% applies to taxable income between £50,271 and £125,140. The Welsh additional rate of 45% applies to taxable income over £125,140. This means a Welsh taxpayer earning £45,000 pays the same amount of Income Tax as a taxpayer in England, but a Scottish taxpayer on the same income pays more because of Scotland's additional bands. If the Welsh Government exercises its rate-varying powers in future, these bands and rates could change.

The WRAIT System

The WRAIT system is administered by HMRC, which collects the Welsh rates alongside UK rates in a single tax code. For employees, the C prefix on the tax code ensures that Welsh rates are applied to your earned income. For self-employed individuals, the Self Assessment tax return includes a question about your Welsh taxpayer status, and HMRC applies the Welsh rates to your profits. The WRAIT system is designed to be as seamless as possible — most Welsh taxpayers do not notice any difference in how their tax is collected. The Welsh Government receives the revenue from the Welsh rates directly, which it uses to fund public services in Wales such as health, education, and transport.

Practical Impact on Welsh Taxpayers

For the 2026/27 tax year, the practical impact of WRAIT on most Welsh taxpayers is zero — the rates are identical to those in England and Northern Ireland. Your tax code will have a C prefix (for example, C1257L for the standard Personal Allowance), and your payslip will show Welsh Income Tax rather than UK Income Tax. If you move from England to Wales, your tax code will change from L to C, but the amount of tax you pay will not change unless you also have a change in income. If the Welsh Government ever changes the rates, your tax liability could increase or decrease without any change to your income. It is worth checking your personal tax account regularly to ensure your Welsh taxpayer status is correctly recorded.

Future of Welsh Income Tax

The Welsh Government has not yet exercised its power to vary income tax rates. The current alignment with UK rates is expected to continue for the foreseeable future, but the Senedd could decide to introduce different rates in a future Budget. Any change would be announced in the Welsh Budget and would apply from the start of the following tax year. The Welsh Government also has powers over some smaller taxes, including Land Transaction Tax (Wales's equivalent of Stamp Duty) and Landfill Disposals Tax. Income Tax remains the largest tax that the Welsh Government can influence.

Need help navigating UK taxes? Browse all UK guides or try our calculators.