The Welsh Government now has the power to increase income tax, after new powers came into effect this month – the beginning of the new tax year.
HM Revenue and Customs (HMRC) has already written to two million people in Wales ahead of the introduction of the new Welsh Rates of Income Tax (WRIT).
Income tax will continue to be collected from pay and pensions through PAYE and Self Assessment in the same way. The Welsh Government is now able set its own income tax rates and WRIT taxpayers will receive a new tax code, starting with C for Cymru.
Ministers will be able to adjust income tax by 10p in every £1 for each band.
However, taxpayers in Wales will see no difference to the income tax they pay in the tax year 2019/20, as the rates will remain the same. Welsh Ministers have made a commitment not to raise rates during this Assembly term, which ends in May 2021.
Finance Minister Rebecca Evans AM said: “This is a very important and exciting time for devolution in Wales. We have now reached another major milestone in our tax devolution journey.
“Some £5 billion of devolved and local tax revenue will now be raised in Wales and will stay in Wales. This gives us the ability to think more widely about how tax policy can work with the Welsh Government’s wider ambitions for Welsh public services such as schools, hospitals and roads.”