On 14 October 2025, the Welsh Government published its Outline Draft Budget Report and Tax Policy Report. This included details of the 2026/27 proposals for taxes that are:
- Shared with the UK Government (Income Tax); and
- Devolved to the Welsh Government (Land Transaction Tax (LTT) and Landfill Disposals Tax (LDT))
At this time this was published, ICB commented that the proposals would not pass through into legislation if the minority Welsh Labour Government did not form a coalition or obtain cross-party support.
The Welsh Final Budget was published on 20 January 2026, at which time Mark Drakeford, Cabinet Secretary for Finance and Welsh Language, said that such support had been reached with Plaid Cymru and this was reflected in the Senedd vote on 27 January 2026 which bring the changes into effect. In fact, Plaid Cymru abstained from voting which was how the Budget passed.
For payroll, the important point is the Welsh Rates of Income Tax (WRIT) remain unchanged at 10p for all rates of Income Tax. The 27 January 2026 vote puts these into place via the annual Welsh Rate Resolution (Motion NDM9117).
For Bookkeepers
No change equals stability which is good for professionals, for example, employees paying at the Welsh rates and software developers who facilitate this calculation.
Simply, for Welsh Taxpayers, the rates in 2026/27 are shown in the below table. This reflects the sharing powers which mean the Welsh Government can vary the three Income Tax rates (Basic, Higher and Additional) for Welsh taxpayers. The UK Government reduces each of the three UK Income Tax rates for Welsh taxpayers by 10p and the Welsh Government adds back the rates set in the annual Resolution:
|
Band
|
Rate
|
Less
|
Plus WRIT
|
Rate
|
|
|
%
|
%
|
%
|
%
|
|
Basic
|
20
|
10
|
10
|
20
|
|
Higher
|
40
|
10
|
10
|
40
|
|
Additional
|
45
|
10
|
10
|
45
|
