Tax19 October 2026

Welsh Rates of Income Tax Explained: the C Tax Code, What Wales Controls and What Could Change

Written and reviewed by, LLM (UK), CFP®·Published

Welsh Rates of Income Tax Explained: the C Tax Code, What Wales Controls and What Could Change

Since April 2019, part of the income tax paid by people who live in Wales has been set in Wales. For 2026/27 the Senedd has kept the Welsh rate at 10p in every band, so a Welsh taxpayer pays exactly the same overall rates as someone in England or Northern Ireland: 20%, 40% and 45%. The money split behind the scenes is different, and so is what could change in future.

This guide explains how the Welsh rates are built, how to check your C tax code, who counts as a Welsh taxpayer, what the Senedd can change, and its new power over property income from April 2027. For everything else that differs in Wales, see our Wales hub.

Try it yourself: the Income Tax Calculator gives the correct 2026/27 answer for Welsh taxpayers, and the Salary Calculator shows take-home pay after National Insurance and pension. Use the standard (non-Scottish) setting.

How Welsh rates of income tax work

The mechanism is simple once you see it. For anyone who is a Welsh taxpayer, the UK Government reduces each of the three main income tax rates on earnings by 10 percentage points. The Senedd then sets a Welsh rate for each band, which is added back on top.

Band (2026/27, standard allowance) UK rate after 10p reduction Welsh rate set by the Senedd Overall rate
Personal Allowance, up to £12,570 0% 0% 0%
Basic rate, £12,571 to £50,270 10% 10% 20%
Higher rate, £50,271 to £125,140 30% 10% 40%
Additional rate, over £125,140 35% 10% 45%

The Senedd approved the 10p Welsh rates for 2026/27 on 27 January 2026, as part of the Welsh Budget. Because 10p simply restores what the UK took away, the end result matches England and Northern Ireland, and the GOV.UK page on Income Tax in Wales lists the same 20%, 40% and 45% rates.

HMRC still collects the tax through PAYE and Self Assessment. The difference is where the money goes: the revenue raised by the Welsh rates funds the Welsh Government.

Worked example: a £40,000 salary in Wales

Take an employee in Cardiff earning £40,000 in 2026/27 with the standard tax code.

  • Personal Allowance: £12,570
  • Taxable income: £40,000 minus £12,570 = £27,430, all in the basic-rate band
  • UK portion at 10%: £27,430 × 10% = £2,743
  • Welsh portion at 10%: £27,430 × 10% = £2,743
  • Total income tax: £5,486

That is exactly what the same person would pay in Bristol. On £30,000 the bill is £3,486, split £1,743 UK and £1,743 Welsh.

A higher-rate example shows why the split is not always 50:50. On £60,000, taxable income is £47,430:

Slice of taxable income Overall rate Tax UK portion Welsh portion
First £37,700 20% £7,540 £3,770 (10%) £3,770 (10%)
Next £9,730 40% £3,892 £2,919 (30%) £973 (10%)
Total £11,432 £6,689 £4,743

The Welsh share is always 10p on every pound of taxable earnings. You never see this split on a payslip, but it decides what each government can change.

The C tax code: how to check yours

HMRC identifies Welsh taxpayers by putting a C at the start of the tax code, so the standard code for 2026/27 is C1257L rather than 1257L. Scottish taxpayers have an S instead.

Check it in three places:

  1. Your payslip, usually next to your National Insurance number.
  2. Your P60 at the end of the tax year, or a P45 if you change jobs.
  3. Your HMRC personal tax account or the HMRC app, which also shows codes for pensions and second jobs.

What to do if it is wrong:

  • You live in Wales and there is no C. It makes no difference to your 2026/27 bill, but it will if the Welsh rates ever diverge. Update your address with HMRC.
  • You have moved to Scotland and still have a C (or vice versa). This matters, because Scottish rates differ. Tell HMRC promptly, or you may face an underpayment later. Our Tax Code Calculator decodes the letters and numbers.

Who counts as a Welsh taxpayer

Being a Welsh taxpayer has nothing to do with where you work or where your employer is based. It depends on where you live. According to GOV.UK, you pay the Welsh rates if you live in Wales, and the test is applied across the whole tax year from 6 April to 5 April.

  • One home. If your only home is in Wales, you are a Welsh taxpayer, even if you commute every day to Bristol or Chester.
  • More than one home. It turns on your main home, which is usually where you live and spend most of your time. Whether you own it, rent it or live there rent-free makes no difference. Where your family, possessions, GP and bank are registered can point to your main home.
  • No clear main home. You are a Welsh taxpayer if you spend more of the tax year in Wales than in any other part of the UK.
  • Moving during the year. Status applies for the whole year. Someone who moves from Swansea to Edinburgh in August is a Scottish taxpayer for that year.

The legal definition is in the Income Tax Act 2007 and the Government of Wales Act 2006, both on legislation.gov.uk.

What the Senedd can change, and what it cannot

Element of income tax Who decides for Welsh taxpayers
The Welsh rate in each of the basic, higher and additional bands Senedd
Personal Allowance (£12,570) and its taper above £100,000 UK Parliament
Band thresholds (£50,270 and £125,140) UK Parliament
Tax on savings interest UK Parliament
Tax on dividends UK Parliament
National Insurance UK Parliament
Reliefs, such as pension tax relief and Marriage Allowance UK Parliament

The Senedd sets each Welsh rate separately, so it could change the higher-rate Welsh rate without touching the basic rate. It cannot add new bands, as Scotland has done, or move the thresholds. Each year's rates are set by a Senedd resolution under section 116D of the Government of Wales Act 2006, normally passed alongside the Welsh Budget early in the calendar year.

As an illustration only: if the Welsh basic rate were 11p, our £40,000 earner would pay an extra 1% of £27,430, or £274.30 a year.

Savings and dividends stay UK-wide

Savings interest and dividends are taxed at the UK rates wherever you live, so a Welsh taxpayer gets the same Personal Savings Allowance and pays dividend tax at 10.75%, 35.75% and 39.35% in 2026/27, like everyone else. Your earnings decide which band applies to them. Our guides to tax on savings interest and dividend tax cover the detail.

Property income from April 2027: a new Welsh power

The Autumn Budget 2025 announced separate income tax rates for property income, such as rent from buy-to-let, from 6 April 2027: a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%. These apply in England, Wales and Northern Ireland. Savings interest moves to the same 22%, 42% and 47% from April 2027 across the whole UK.

For Wales the important detail is in section 8 and Schedule 2 of the Finance Act 2026. They give the Senedd power to set a Welsh rate for property income in each band, using the same method as earnings: the UK property rates are reduced and the Welsh rate is added back. These provisions were brought into force on 16 September 2026 for the 2027/28 tax year onwards.

What that means in practice:

  • The Senedd can set Welsh property basic, higher and additional rates for Welsh taxpayers from 2027/28.
  • It cannot set its own property income thresholds; the bands follow the UK ones.
  • As with earnings, it depends on where the landlord lives, not where the property is. A landlord whose main home is in Newport and who lets a flat in Manchester is a Welsh taxpayer on that rent.
  • The Welsh property rates for 2027/28 will be set through the Welsh Budget process. Until they are, plan on the UK figures of 22%, 42% and 47%.

Landlords can model rental profit with the Buy-to-Let Calculator.

The UK Autumn Budget on 28 October 2026 could change UK thresholds or rates that also apply in Wales.

Frequently asked questions

Do people in Wales pay more income tax than in England? Not in 2026/27. The Welsh rates are 10p in each band, which leaves the overall rates at 20%, 40% and 45%, the same as England and Northern Ireland.

What does the C in my tax code mean? It tells your employer or pension provider that you are a Welsh taxpayer. The standard code for 2026/27 is C1257L. It does not change the tax you pay this year.

I work in Wales but live in England. Am I a Welsh taxpayer? No. It depends on where your main home is, not where you work. You should have a code without a C.

Will Wales set its own tax on rental income? It has the power to, from the 2027/28 tax year. The rates will be decided through the Welsh Budget; the UK default rates are 22%, 42% and 47%.

The bottom line

A Welsh taxpayer on £40,000 pays £5,486 of income tax in 2026/27, the same as in England, with £2,743 of it raised by the Welsh rate. Check that your tax code starts with C, keep HMRC up to date when you move, and keep an eye on the Welsh Budget: from April 2027 the Senedd can set the rate on rental income as well as on earnings.

Run your own figures through the Income Tax Calculator or the Salary Calculator, and see the Wales hub for everything else that differs in Wales.

Related calculators and guides

This article is for general guidance only and is not personalised tax advice. Tax rules are complex and your circumstances may differ. For advice tailored to your situation, speak to a qualified accountant or tax adviser. Figures are for the 2026/27 tax year and sourced from gov.uk and gov.wales.

Sources

Rates and rules in this article are taken from the official pages below. Figures were checked against these sources at the last review date shown above; always confirm against the source before acting.

About the author

, LLM (UK), CFP®, CIM®, PFP®. Financial planner with 18 years in banking and wealth management, holding a UK master of laws and the Canadian CFP®, CIM® and PFP® designations. Writes and reviews every calculator and article on FinanceToolz.

Rates and thresholds in this article are taken from HMRC and GOV.UK. See our editorial policy for how content is sourced, reviewed and corrected. This is general information, not regulated financial advice.

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