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Wales Online
Wales Online
Business
Will Hayward

People in Wales have been paying the wrong rate of income tax

People across Wales have been paying the wrong rate of income tax because of an HMRC blunder.

Some people in Wales have had a Scottish tax code applied to their income tax which is a higher rate.

The Welsh Rates of Income Tax (WRIT) was introduced in April 2019. Welsh taxpayers are assigned a C prefix in their tax code denoting where they live.

HMRC has admitted applying an S prefix, so some people meaning they are paying Scottish rates. You can find the code on your payslip.

It is not yet known how many people are affected.

How to check if you have been paying the wrong income tax rate in Wales 

How tax rates compare in Wales and Scotland

Scottish tax bands

Starter rate - Over £12,500-£14,549  - 19%

Scottish basic rate - Over £14,549-£24,944 - 20%

Intermediate rate - Over £24,944-£43,430 - 21%

Higher rate - Over £43,430-£150,000 - 41%

Top rate - Above £150,000 - 46%

Welsh tax bands

Personal allowance - Up to £12,500 - 0%

Basic rate - £12,501 to £50,000 - 20%

Higher rate - £50,001 to £150,000 - 40%

Additional rate - over £150,000 - 45%

Where you can see the code on a payslip

The Chair of the National Assembly’s Finance Committee, Llyr Gruffydd AM said: "HMRC’s admission is deeply disappointing as this Committee was repeatedly given assurances that mistakes like this would not happen.

"We raised concerns about the flagging process for identifying Welsh taxpayers during our inquiries into fiscal devolution and the Welsh Government’s draft budget.

"On each occasion we were told the matter was in hand and the lessons from the devolution of income tax powers to Scotland, where there were similar issues, had been soundly learned and would be put into effect.

"We are seeking an immediate explanation of how this has happened and will be asking representatives from HMRC to appear before this Committee in the near future.”

The Welsh MPs and AMs who employ members of their own families

HMRC have said they are working with employers to correct the problem.

An HMRC spokesman said: "We have been made aware of an error in the application of new income tax codes for Welsh taxpayers by some employers which has meant some taxpayers payed the incorrect amount of tax in April.

"It is the responsibility of the employer to apply the tax codes provided by HMRC and we are working closely with the employers affected and providing support as they investigate and correct the problem."

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