Welsh Rates of Income Tax Explained for 2025/26
Wales has the power to set its own income tax rates but has chosen to match England exactly in 2025/26. Here's how Welsh Income Tax works, what a 'C' tax code means, and the devolved tax powers Wales actually uses.
How Welsh Income Tax Works
Since April 2019, the Welsh Government has the power to vary income tax rates for Welsh taxpayers. The mechanism is:
- Westminster reduces the UK income tax rates by 10p in each band for Welsh taxpayers
- The Welsh Government sets its own rate (the Welsh Rate of Income Tax — WRIT) to add on top
- Total income tax = UK rate (reduced by 10p) + WRIT
2025/26 WRIT Rates
| Band | UK Reduced Rate | WRIT | Total Rate |
|---|---|---|---|
| Basic rate | 10% | 10% | 20% |
| Higher rate | 30% | 10% | 40% |
| Additional rate | 35% | 10% | 45% |
The Welsh Government voted to set WRIT at exactly 10p in each band — perfectly offsetting the Westminster reduction. The result: Welsh Income Tax is identical to English rates in 2025/26.
The C Tax Code
HMRC identifies Welsh taxpayers via a C prefix on their PAYE tax code:
| Tax Code | Meaning |
|---|---|
| C1257L | Welsh taxpayer, standard Personal Allowance of £12,570, basic rate applies |
| CS1257L | Welsh taxpayer, same-job situation (S suffix — see employer guidance) |
| CBR | Welsh taxpayer, basic rate on all income (new job, no P45) |
| C0T | Welsh taxpayer, no Personal Allowance applied |
| CD0 | Welsh taxpayer, additional rate on all income from this employer |
You are a Welsh taxpayer if you live in Wales — not if you work in Wales but live elsewhere. HMRC determines residency based on your address. If you commute to Bristol but live in Cardiff, you are Welsh for income tax purposes.
Scotland (S prefix) vs Wales (C prefix) vs England
| England / NI | Wales | Scotland | |
|---|---|---|---|
| Tax code prefix | None (e.g. 1257L) | C (e.g. C1257L) | S (e.g. S1257L) |
| Basic rate | 20% | 20% | 20% |
| Higher rate | 40% | 40% | 42% |
| Additional rate | 45% | 45% | 48% |
| Higher rate threshold | £50,270 | £50,270 | £43,662 |
In 2025/26, only Scotland has materially different rates. Welsh residents pay exactly the same as English residents.
Why Wales Has Not Yet Used Tax Powers
The devolution of income tax-varying powers to Wales was controversial within the Senedd (Welsh Parliament). Several considerations explain the current "matching" approach:
- Business competitiveness: raising rates above England risks driving some high earners across the border (Monmouthshire, Cardiff suburbs close to Bristol)
- Fiscal framework: Wales receives a block grant from Westminster that adjusts as WRIT revenue changes — complex interactions make unilateral rate changes risky
- Political caution: the Welsh Labour government has focused tax-raising powers on areas fully devolved (LTT rates, non-domestic rates)
- Income distribution: Wales has lower median earnings than England — raising the higher rate threshold or basic rate would have different distributional effects than in England
The Welsh Government has indicated it may diverge from England in future years but has made no formal commitment for 2026/27.
Land Transaction Tax (LTT) — Where Wales Differs
LTT replaces SDLT in Wales and has been in force since April 2018. Rates for 2025/26:
Residential LTT rates
| Purchase Price | LTT Rate |
|---|---|
| Up to £225,000 | 0% |
| £225,001 – £400,000 | 6% |
| £400,001 – £750,000 | 7.5% |
| £750,001 – £1,500,000 | 10% |
| Above £1,500,000 | 12% |
Note: there is no first-time buyer relief in Wales under LTT (unlike England's FTB relief up to £300,000). All buyers pay the same LTT rates.
LTT vs SDLT: who pays more?
| Purchase Price | SDLT (England) | LTT (Wales) | Difference |
|---|---|---|---|
| £200,000 | £1,500 | £0 | Wales cheaper |
| £250,000 | £2,500 | £1,500 | Wales cheaper |
| £280,000 | £4,000 | £3,300 | Wales cheaper |
| £300,000 | £5,000 | £4,500 | Wales cheaper |
| £350,000 | £7,500 | £7,500 | Same |
| £400,000 | £10,000 | £10,500 | Wales more expensive |
| £500,000 | £15,000 | £18,250 | Wales more expensive |
The crossover point where LTT becomes more expensive than SDLT is approximately £345,000.
Higher rates for additional properties (LTT)
An additional 5% applies to each LTT band for additional residential property purchases:
| Purchase Price | Standard LTT | Higher Rate LTT |
|---|---|---|
| Up to £225,000 | 0% | 5% |
| £225,001 – £400,000 | 6% | 11% |
| £400,001 – £750,000 | 7.5% | 12.5% |
| £750,001 – £1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
Council Tax in Wales 2025/26
Wales has 9 council tax bands (England has 8), including a new Band I added in 2005 for the highest-value properties:
| Band | Property Value (1991 estimate) | Typical Range |
|---|---|---|
| A | Up to £44,000 | Lowest |
| B | £44,001 – £65,000 | |
| C | £65,001 – £91,000 | |
| D | £91,001 – £123,000 | Average band |
| E | £123,001 – £162,000 | |
| F | £162,001 – £223,000 | |
| G | £223,001 – £324,000 | |
| H | £324,001 – £424,000 | |
| I | Above £424,000 | Highest (Wales only) |
Revaluation planned
Wales uses 1991 property values for banding — the same as England. However, the Welsh Government has been consulting on a revaluation using 2003 values (which would change millions of properties' bands). Any revaluation would be revenue-neutral overall but could shift bills significantly for individual households.
Wales vs England: council tax levels
Council tax in Wales is generally higher than England for equivalent band properties. The 2024/25 average Band D council tax in Wales was approximately £2,007, compared to England's average of approximately £2,171 — close, with significant variation by local authority in both countries.
Non-Domestic Rates (Business Rates) in Wales
Business rates are partially devolved. The Welsh Government sets:
- The multiplier (poundage rate)
- Small Business Relief thresholds
- Discretionary reliefs
In 2025/26, the Welsh non-domestic rates multiplier is 56.2p (compared to England's 54.6p standard / 49.9p small business). Welsh small business rates relief (SBRR) applies:
- Rateable value ≤ £6,000: 100% relief (no rates payable)
- £6,001 – £12,000: tapered relief
- Retail, leisure and hospitality with RV ≤ £500,000: 40% relief cap (similar to England's 40% RHL relief)
Landfill Disposals Tax (LDT)
Wales was the first UK nation to introduce its own equivalent of Landfill Tax from April 2018. In 2025/26:
- Standard rate: £126.15 per tonne (the same as the UK Landfill Tax rate — coordinated to avoid waste tourism)
- Lower rate (inert waste): £4.05 per tonne
- Unauthorised disposal: £253 per tonne (double the standard rate)
LDT is paid by landfill operators, not individuals directly, but feeds through to waste disposal and skip hire costs.
Living in Wales: Tax Summary 2025/26
| Tax | Wales | England | Difference |
|---|---|---|---|
| Income Tax | Same rates (20%/40%/45%) | Same | No difference |
| NI | Same (reserved) | Same | No difference |
| Property purchase (LTT/SDLT) | Different bands | Different | Wales cheaper under £345k; more expensive above |
| Council Tax | 9 bands, slightly different averages | 8 bands | Marginal difference |
| Business Rates | Higher multiplier | Lower multiplier | Wales slightly higher |
| CGT | Same (reserved) | Same | No difference |
| IHT | Same (reserved) | Same | No difference |
Frequently asked questions
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