Welsh Budget: ‘No change’ on income tax contrasts with Scots

CIOT contrasts this with the news in today’s Scottish Budget of tax increases for higher earners in Scotland. A new 45 per cent tax band will be introduced for people earning between £75,000 and £125,140 in Scotland, while the top rate of tax, paid by those earning more than £125,140, will rise from 47 per cent to 48 per cent.

Ritchie Tout, chair of the CIOT’s Welsh Technical Committee, said:

“The two budgets unveiled today tell the story of the different approaches being taken on income tax by the Welsh and Scottish governments.

“The Scottish Government has once again used its powers to increase income tax for higher earners, while the Welsh Government continues to take a more cautious approach, keeping Welsh Rates of Income Tax in line with those in England.

“As a result Scottish taxes remain slightly lower than those in Wales or England for those on lower incomes but increasingly higher for those with higher incomes.

“The Welsh Government has more limited options compared to Scotland in that it can only vary the rates of the three existing income tax bands, rather than creating new ones. Both governments are hamstrung to some degree by the current tax devolution package but the tools at the disposal of the Welsh Government are markedly blunter than those available to the Scots.

“However it is still open to them to raise or lower income tax for basic, higher or additional rate taxpayers and the fact that they have chosen not to do so since gaining the power in 2014 illustrates both the tricky trade-offs involved and the particular challenges of our porous border with England, with many people living on one side and working on the other.

“Although Welsh Rates of Income Tax will remain unchanged most Welsh taxpayers on a given salary will see their take home pay rise in the new year because of the UK Government’s decision to cut National Insurance for employees by two percentage points from January. Cuts for the self-employed will take effect in April. But these cuts are more than outweighed by the Westminster Government’s decision to keep the income tax personal allowance frozen until 2029.”

ENDS