Welsh Tax Devolution: Understanding Devolved Taxes
Wales has devolved powers over certain taxes. Understanding which taxes are devolved and how they're used is important for understanding the Welsh tax system.
**What is tax devolution?**
Tax devolution means that the Welsh Government has the power to set rates and thresholds for certain taxes, rather than these being set by the UK Government. This allows the Welsh Government to tailor the tax system to the needs of Wales.
**Devolved taxes**
The main devolved taxes in Wales are Land Transaction Tax (LTT), the Welsh Rates of Income Tax, and business rates. The Welsh Government can set the rates and thresholds for these taxes.
**Land Transaction Tax**
LTT is fully devolved to Wales. The Welsh Government sets the rates and thresholds. This means LTT in Wales can differ significantly from SDLT in England.
**Welsh Rates of Income Tax**
The Welsh Rates of Income Tax are partially devolved. The Welsh Government can set the basic rate and higher rate, but the additional rate is set by the UK Government. This limits the Welsh Government's control over income tax rates.
**Business rates**
Business rates are partially devolved. The Welsh Government sets the multiplier, but the rateable values are determined by the Valuation Office. Local councils collect the rates and use them to fund local services.
**Non-devolved taxes**
Most other taxes, such as corporation tax, VAT, and National Insurance, are not devolved. These are set by the UK Government and apply across the UK.
**Implications**
Tax devolution means that the Welsh Government can use the tax system to support its priorities. For example, the Welsh Rates of Income Tax are lower than in England, which is designed to support the Welsh economy. Similarly, LTT rates can be set to reflect the Welsh housing market.
**Future devolution**
There have been discussions about further tax devolution to Wales. This could include devolution of additional taxes, such as Air Passenger Duty. However, any further devolution would require changes to the devolution settlement.
**Learn more:** For professional guidance on this topic, visit [Accounted For Ltd](https://accountedforltd.co.uk/wales).
Learn more: For professional guidance on this topic, visit Accounted For Ltd