SAM101390 - Records: maintain taxpayer record: Welsh income tax
Background
The Welsh Rates of income tax (WRIT) as introduced by the Wales Act 2014 will be charged on the non-savings and non-dividend income of those defined as Welsh customers and started in April 2019.
The definition of a Welsh customer is focused on where an individual lives, or resides, in the course of a tax year. Welsh customer status applies for a whole tax year. It is not possible to be a Welsh customer for part of a tax year therefore it is important that when creating a new SA record the ‘Base address effective from’ box is completed. Likewise when recording a change of address, the date of the change must be recorded. Further information on this subject can be found at SAM101270 ‘Maintaining addresses’ and how to record the change in the Customer Business Guide (TBS) at TBSG055 ‘Enter or amend address’ or using NPS if an NPS record is held showing the customer’s UTR, to keep all related systems in line.
For tax years 2019-20 onwards, the Welsh customer (WTp) status can be seen in NPS. NPS should be used to view the Welsh Main place of residence status (WMPR) start and end dates.
Definition of a Welsh customer
For an individual to be a Welsh customer, they must be resident in the UK for tax purposes and have their sole or main place of residence in Wales.
Individuals who have more than one place of residence in the UK need to determine which of these has been their main place of residence for the longest period in a tax year. If this is in Wales, they are a Welsh customer. For example, if an individual with a single place of residence moves house into, or out of, Wales part way through a tax year, deciding whether they will be a Welsh customer in that year or not will depend on which house is their main place of residence for the longer amount of time.
Individuals who cannot identify a main place of residence will need to count the days they spend in Wales and the days they spent in other parts of the UK - England, Northern Ireland and/or Scotland. For example, if they spend 125 days in Wales, 120 days in Scotland and 120 days in England or Northern Ireland, they will be a Welsh Taxpayer as they have spent the most time in Wales. Where this applies, they will be treated as a Welsh customer for the whole year.
Note: Only HMRC can decide an individual’s customer status. An employer cannot make this decision or inform HMRC of an employee’s customer status.
Exceptions
There are separate rules that apply to Welsh Parliamentarians. All Welsh parliamentarians will be Welsh customers wherever they live, and an individual is a Welsh Parliamentarian for a tax year if for the whole year, or any part of that year, they are
- A Member of Parliament (MP) for a constituency in Wales
- A Member of the European Parliament (MEP) for Wales
- A Member of the Welsh Assembly (AM)
Note: Investment income will be taxed at UK rates regardless of an individual’s status and Charities will claim Gift Aid at the UK basic rate. Higher rate and additional rate Welsh customers will reclaim Gift Aid at the Welsh rates.
Terminology
| Term/Word | Meaning |
|---|---|
| Welsh Main Place of Residence (WMPR) | If Welsh customers reside in Wales for more than 183 days in a year, they will be a Welsh resident and liable for WRIT. Where a customer may work in Wales, and therefore be in Wales for more than the 183 days per year, they may not necessarily be a Welsh resident. Residency will be established by where they are registered for GP’s, dentists and where their family home is. Residency guidance from Central Policy will also provide supplementary information |
| Address Effective from date | This is an important element from 6 April 2019 and will establish the point where a customer becomes a Welsh customer dependent on the date they class their main place of residence as a Welsh address |
| C prefix for tax code | From April 2019, all Welsh Customers will be identified by a C prefix on their tax code. The notification letter will provide information to customers around this |
| WRIT | Welsh rate of income tax |
| Welsh rate of income tax | The rate that the Welsh Government sets |
| Welsh customer (WTp) | Person liable to pay the Welsh rate of income tax |
| Welsh basic rate | The UK basic rate of income tax, less ten percentage points, plus the Welsh rate of income tax |
| Welsh higher rate | The UK higher rate of income tax, less ten percentage points, plus the Welsh rate of income tax |
| Welsh additional rate | The UK additional rate of income tax, less ten percentage points, plus the Welsh rate of income tax |
| Welsh main rates | Collectively, the Welsh basic rate, the Welsh higher rate and the Welsh additional rate of income tax |
| The main rates of income tax | Collectively, the UK (England & Northern Ireland), Scottish and Welsh basic rate, higher rate and the additional rate of income tax |