Guest Blog - Enhancing Well-Being Through Tax Policy: Insights from Wales

25 Sept 2025

In this guest blog, Dr Sara Closs-Davies from the University of Manchester discusses how tax policymaking could influence trust in and compliance with the tax system, focusing on the Welsh approach.

Tax policy sits at the heart of public life and is more than a transactional mechanism to raise government revenue: it links people together, creates relationships and shapes what is, and is not, important in society. Tax policy influences social perceptions, actions and behaviour, and contributes towards the prosperity and well-being of citizens and their communities.  

 In this blog, I explore how tax policymaking and consultation influence social relationships and well-being, trust in the tax system and tax compliance; focusing on Wales as my case study. An understanding of these crucial aspects and recent developments is important for tax advisers, and can affect their relationships with clients and tax authorities.  

Challenges of the UK tax system

UK tax policy processes follow a predictable legal cycle, usually entailing a Budget announcement, in the Autumn Statement, followed by a consultation phase, evidence gathering and select committee scrutiny of the Budget during the Winter and Spring. The House of Commons usually commences a consultation process to develop the Budget into a refined Finance Bill which is ultimately presented for Royal Assent for it to become an Act of law.

Whilst structured and predictable, this process has notable weaknesses, especially for external stakeholders, such as tax professionals. It is often unclear how evidence is assessed or incorporated, especially before the Budget announcement. Tax policymaking timelines are often compressed and rapid to meet Treasury deadlines, limiting opportunities for deep consultation, meaningful and wide engagement. Stakeholder input is narrow and often limited to the same participants, leaving limited opportunity and space for new or diverse perspectives and expertise. The Institute for Government (2023[1]) and the Social Security Advisory Committee (2016[2]) have raised significant concerns about this, noting that rushed, non-transparent processes can lead to poorly integrated policies, compliance challenges and an inefficient and ineffective tax system.

Further, tax advisers may incur increased interpretation risk when advising clients, with the potential for unintended consequences in tax planning, resulting in a lack of clear guidance and detail about new taxes or changes, or challenges in aligning client strategies with evolving, and sometimes unclear, tax rules. This may result in clients losing trust in the tax advisor (Closs-Davies et al., 2024[3]) and in His Majesty’s Revenue and Customs (HMRC), leading some citizens to suffer anxiety, stress and, at worst, nervous breakdowns and suicidal thoughts (Closs-Davies, 2021[4]).   

Of course, without tax policy, the funding of essential services to the public would be impossible. Nevertheless, tax policy must be designed to support the sustainability of a prosperous society at both individual and community levels: supporting economic growth, but also addressing social wellbeing concerns to help promote social equity, understanding, transparency and trust.

Wales’ approach to tax policymaking

Partial devolution of certain tax powers to Wales has enabled innovation within its tax policymaking processes, allowing Wales to incorporate aspects of well-being, accessible and transparent consultation processes.

Devolution “involves the transfer of powers previously exercised by ministers and parliamentary bodies to a subordinate elected body, defined on a geographical basis”[5], allowing devolved governments the opportunity to design and implement their own policies, tailored towards local needs. Whilst partial devolution creates policy divergence from central government on certain social and economic matters, it allows continued convergence between devolved governments on other matters that remain within central state control (Closs-Davies & Sawyer, 2025[6]).

The partial devolution of tax powers[7] has enabled the Welsh Government (WG) to create a set of values and commitments to which it holds itself accountable. Wales’  ‘tax approach’  includes evidence-based policymaking, engaging with diverse stakeholders from different age groups and professional and third sectors, academia etc. Engagement also includes focus group sessions across Wales with citizen taxpayers and relevant representatives, and the Tax Engagement Group forum where professionals work alongside WG and Welsh Revenue Authority (WRA[8]) officials. An annual Welsh tax conference enables stakeholders to converge to gain a clearer understanding of the impact of (new and existing) tax policies, and WG and WRA webinars, videos and posts on social media channels also help raise awareness and understanding.

Wales’ ‘tax approach’ offers a different model that integrates well-being into tax policymaking. Guided by the Well-being of Future Generations (Wales) Act 2015, Welsh tax policymaking moves beyond transactional and one-directional consultation, towards relational policymaking, where the process begins by asking citizens the fundamental question: “What matters to you?” This is operationalised through the WG’s Tax Policy Framework which sets out five core principles: fairness, sustainability, engagement, simplicity, and efficiency.

The above initiatives enable policymakers in Wales to design tax systems that reflect the needs and values of the people they serve through co-creation of tax policies rooted in real-world experiences and voices, creating greater trust and improved awareness and understanding between taxpayers, tax professionals and the tax authority which can lead to improved tax compliance as taxpayers gain better understanding of their tax obligations and how their contributions benefit society. Thus, fostering trust, transparency and reducing perceptions of social inequity.

Putting policy into practice 

But how does tax policy come alive and manifest at the frontline?

The WRA performs well in several key areas[9]. First, the WRA’s recruitment process includes a focus on human skills from diverse sectors and backgrounds, such as customer services and hospitality. Second, WRA front-line staff can exercise discretion and professional judgement when helping themselves, colleagues and service users (tax advisers and taxpayers), reducing reliance on rigid systems, scripts and performance metrics[10].

Further, the WRA does not focus on input-driven performance targets; rather, it focuses on outcome-focused performance measures. Thus, prioritising service quality. The WRA’s culture and accountability mechanisms have strong emphasis on reflexive and compassionate accountability, whereby management and staff work collaboratively towards achieving WRA’s objectives. Frontline staff share their experiences, concerns and offer solutions to management, fostering a collaborative learning environment, and ultimately enhanced taxpayer services.

According to the Civil Service People Survey (2024) 92% of WRA employees would recommend the WRA as a great place to work (HMRC: 53%); 70% reported having the opportunity to contribute their views to the organisation (HMRC: 30%); and 89% felt they get the information needed to do their job well (HMRC: 66%). Such survey results enhance tax authority workers; happiness and well-being, which then has a knock-on effect on frontline encounters with service users (Closs-Davies & Rogers, 2024[11]).  

Such internal practices within the WRA have an external impact, signalling several key trends that other governments and tax authorities could potentially learn from. For example, the increased emphasis on compliance through trust (re)shapes how the WRA are moving away from a purely enforcement-based approach towards models that encourage voluntary compliance. Tax advisers can help clients understand the social value of tax contributions to align with this direction.

Conclusion

The Welsh tax model demonstrates how tax policymaking can be collaborative, transparent, and well-being focused. For tax professionals, this fosters trust and effective advice in a rapidly evolving landscape. As Wales continues to introduce potential new taxes, it offers a valuable blueprint for improving taxpayer trust and compliance, and the advisor-client relationship.

Dr Sara Closs-Davies

The CIOT publishes guest blogs to stimulate debate on tax policy and related matters. The views expressed in guest blogs are those of the writers and are not necessarily shared by CIOT.

Resources:

  1. Institute for Government, ‘How is Evidence used in Tax Policy Making?’ (2003), available at https://www.instituteforgovernment.org.uk/sites/default/files/2023-08/Evidence-tax-policy-making.pdf.
  2. Paul Gray, “Chair’s Report”, in Social Security Advisory Committee, Social Security Advisory Committee Annual Report 2015–16 (2016), p.5.
  3. Closs-Davies, S., Burkinshaw, L. and Frecknall-Hughes, J., 2024. Is the HMRC charter fit for purpose? Experiences of tax practitioners and vulnerable citizens. British Tax Review, 2024(2), pp.304-326.
  4. Closs-Davies, S., 2021. A Study of the UK Tax Credits system: Transforming Citizens into Self-responsible individuals at the Frontline of Tax Administration. In Contemporary Issues in Taxation Research (pp. 107-134). Fiscal Publications.
  5. Danny MacKinnon, “Devolution, state restructuring and policy divergence in the UK. (2015) 181(1) The Geographical Journal 47-56, p. 48.
  6. Closs-Davies, S., C., & Sawyer, Ad., 2025, ‘Enhancing Well-being and Broadening the Scope of Consultation in Tax Policy Design: A Case Study of Wales’, British Tax Review, Forthcoming
  7. At the time of writing, Wales has powers to manage and administer two main devolved taxes, namely, Land Transaction Tax and Landfill Disposals Tax. 
  8. The Welsh Revenue Authority is a tax authority that collects and manages Welsh devolved taxes
  9. Closs-Davies, S. and Rogers, H., 2019. Funding Prosperity: Creating a new Tax System in Wales. Accessible at, found at https://issuu.com/federationofsmallbusinesses/docs/funding-prosperity-creating-a-new-tax-system-in-wa?fr=xKAE9_15JNQ; and see also the Civil Service People Survey: 2024 results, available at https://www.gov.uk/government/publications/civil-service-people-survey-2024-results, accessed, 31.05.2025
  10. Closs-Davies, S.C., Bartels, K.P. and Merkl-Davies, D.M., 2021. “The frog in the pan”: relational transformation of public values in the UK tax authority. Accounting, Auditing & Accountability Journal, 34(7), pp.1635-1663.
  11. Closs-Davies, S., C., & Rogers, H., 2024, “New kids on the block”: New ways of improving tax compliance, trust and well-being within the tax authority and for tax service users’, WIP paper presented at the British Accounting & Finance Association (BAFA) Annual Conference, University of Portsmouth, 9th and 10th of April 2024.