Wales maintains ‘status quo’ on income tax
The Welsh government revealed their draft Budget for 2024-25 on 19 December. Landfill Disposal Tax will be increased in line with inflation. However, there won’t be any rise in either income tax or Land Transaction Tax.
The Welsh Finance Minister, Rebecca Evans, said that her government had put the NHS and local council services ‘at the heart’ of the draft budget. Evans said: “We have had to take some really difficult decisions to radically redesign our spending plans to focus funding on the services which matter most to the people of Wales. This is the toughest financial situation Wales has faced since the start of devolution. We have been presented with the most stark and painful budget choices in the devolution era.”
A summary of the main tax points is as follows:
Income Tax
The Welsh Rates of Income Tax rate will remain at 10 percent, keeping the rate aligned with England and Northern Ireland.
The CIOT responded to this announcement, contrasting it with the news in the Scottish Budget (which took place on the same day) of tax increases for higher earners in Scotland. CIOT also noted that: “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”.
| Income band £ | ||
| Rate | Tax rate | 2024-25 (proposed) |
| Personal allowance (tax-free band) | N/A | £0 - £12,570 |
| Basic rate | 20% | £12,570 - £50,270 |
| Higher rate | 40% | £50,270 - £125,140 |
| Additional rate | 45% | £125,140+ |
Land Transaction Tax (LTT)
No changes are proposed for the LTT rates. However, the government has released two consultations relating to the LTT: LTT special tax sites relief and proposals to amend the refund and exception rules.
Landfill Disposal Tax (LDT)
Landfill Disposal Tax rates will increase in line with inflation. From 1 April 2024 LDT rates will be:
- Standard: £103.70
- Lower: £3.30
- Unauthorised disposals: £155.55
Non-domestic rates
The increase to the Non-Domestic Rates multiplier in Wales will be capped at 5% for 2024-25, at a recurring annual cost of £18m. Business rate relief for pubs, shops and restaurants will be reduced from 75% to 40%.
Visitor levy
Legislation for a visitor levy will be introduced into the Senedd by Autumn 2024.
Spending
The budgets for the NHS and local authorities have been protected. However, a majority of other sectors will undergo budget reductions.
Reactions:
Leader of the Welsh Conservatives, Andrew RT Davies, accused the Welsh government of blaming Westminster for its problems. He said: “Labour ministers have run Wales for 24 years, failing to reform public services and deliver results for the people of Wales.”
The leader of the Lib Dems in Wales, Jane Dodds, suggested that: “Huge parts of Wales are still being left behind with this budget, in particular rural Wales. We need more investment in our rural areas and more support for our farmers.”
Rhun ap Iorwerth, Plaid Cymru leader, called the budget ‘unsustainable’ and raised a concern that it would have a ‘serious’ long-term affect on hard-working people in Wales. He said: “Wales faces a double-whammy. On one hand, the funding deal we get from the UK government is unfair and inadequate. On the other hand, serious questions must also be asked of the way Labour spend public money.”
What happens next:
Following scrutiny of these measures by the Senedd, the government will publish the Final Budget 2024-25 on 27 February 2024.
Key documents: