HMRC applied Scottish tax rates to some Welsh taxpayers by mistake
Some taxpayers in Wales have been paying the wrong rate of tax after having the Scottish tax code mistakenly applied to them, HMRC has admitted.
The Welsh Rates of Income Tax (WRIT) was introduced in April 2019, three years after the introduction of the Scottish Rate of Income Tax (SRIT) in 2016.
Welsh taxpayers are assigned a “C” prefix in their tax code denoting where they live, but HMRC has admitted applying an “S” prefix to some Welsh taxpayers, meaning they have been paying Scottish income tax rates.
A spokesperson for HMRC 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 paid 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.”
Llyr Gruffydd, chair of the finance committee of National Assembly for Wales, 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.”
During the finance committee’s scrutiny of the implementation of fiscal devolution in Wales, the committee expressed its frustration that the UK Government would not appear before the committee on this matter.