SOME taxpayers in Wales may be owed thousands of pounds after it emerged some have been paying Scottish rates of Income Tax.

The Welsh Government was given control over 10p of Income Tax in every £1 at the start of this month - with rates kept the same as in England for the current financial year.

Under the new arrangements Welsh taxpayers were given new tax codes beginning with 'C' - for Cymru. But now it has emerged some taxpayers in Wales were mistakenly assigned 'S' codes - meaning they were instead charged rates set by the Scottish Government - which are higher for all but the lowest earners.

This means, while some on lower incomes between £12,500 and £14,549 may have paid less Income Tax than they should have done, those on higher incomes may have over-paid due to the higher Scottish rates.


Welsh and English Income Tax rates:

  • Personal allowance (up to £12,500): zero per cent
  • Basic rate (£12,501 to £50,000): 20 per cent
  • Higher rate (£50,001 to £150,000): 40 per cent
  • Additional rate (more than £150,000): 45 per cent

Scottish Income Tax rates:

  • Personal allowance (up to £12,500): zero per cent
  • Starter rate (£12,501 to £14,549): 19 per cent
  • Scottish basic rate (£14,550 to £24,944): 20 per cent
  • Intermediate rate (£24,945 to £43,430): 21 per cent
  • Higher rate (£43,431 to £150,000): 41 per cent
  • Top rate (more than £150,000): 46 per cent

Chairman of the Welsh Assembly's Finance Committee Llyr Gruffydd slammed the news as "deeply disappointing".

"This committee was repeatedly given assurances that mistakes like this would not happen," he said.

“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.”

HMRC has said anyone who has paid the incorrect amount of tax through PAYE (Pay As You Earn) does not need to take action, and mistakes will rectified at source.

A 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.”

Although first minister Mark Drakeford previously said he had no intention of increasing income tax until the next Assembly Election in 2021, he has since suggested rates might go up before then.

For questions with your Income Tax contact HMRC.

How to check if you have been paying the wrong rate:

  • Look at your previous pay slips.
  • You should have a letter C in front of your tax code.
  • If you have an S in front of that code you have been paying the Scottish rate of income tax which is higher.