Is Income Tax different in Wales to England?

Full answer

Since April 2019, the Welsh Government has had the power to set its own Welsh Rates of Income Tax, separate from the rest of the UK, under the Wales Act 2014. In practice, for every tax year since then including 2026/27, the Welsh Government has chosen to keep its rates identical to England and Northern Ireland: 20% basic rate, 40% higher rate and 45% additional rate, applied to the same £37,700 and £125,140 thresholds with the same £12,570 Personal Allowance. This is different from Scotland, which has used its much older and wider devolved powers to set five separate income tax bands with different thresholds and rates, including a 19% starter rate and rates up to 48%. A Welsh taxpayer is identified by HMRC through their address on record and is given a tax code with a 'C' prefix (for example C1257L) instead of the standard 'L' suffix code, but because the rates match England, Wales and Northern Ireland exactly, the 'C' prefix currently makes no practical difference to how much tax is paid. National Insurance, which is not devolved and remains a UK-wide reserved matter, is identical in Wales, England, Scotland and Northern Ireland. If the Welsh Government were to diverge from UK rates in a future Budget, HMRC would apply the different Welsh rates automatically based on the taxpayer's main residence.

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