Background to the report

The Wales Act 2016 gave the Senedd (Welsh Parliament) power to determine the rates (excluding the personal allowance) paid by Welsh taxpayers on all non-savings, non-dividend income, from 6 April 2017. From April 2019, the UK government reduced the UK basic, higher and additional income tax rates by 10 percentage points for Welsh taxpayers and the Senedd had the power to apply Welsh rates in addition. For each tax band, the rate of income tax paid is the sum of the reduced rest of UK rate and the new Welsh rate.

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For 2021-22, the Senedd set the Welsh rates of income tax the same as in 2020-21, at 10% across all bands, which meant that the total rates for taxpayers in Wales matched the UK rates at 20% (basic rate), 40% (higher rate) and 45% (additional rate).

Following the end of each tax year, HMRC produces a provisional estimate of Welsh income tax revenue for that year. The final outturn is calculated the following year once HMRC receives further information from taxpayers and employers. This report covers the final outturn for 2020-21 and the provisional estimate for 2021-22.

Scope of the report

The NAO has statutory responsibilities for auditing HMRC’s collection of Welsh income tax. This report considers:

  • HMRC’s calculation of the 2020-21 income tax revenue for Wales, the ‘outturn’, and assurance on the correctness of amounts brought to account (Part One);
  • HMRC’s estimate of the 2021-22 income tax revenue for Wales and our view on the estimate methodology (Part One);
  • key controls operated by HMRC to assess and collect income tax (Part Two);
  • HMRC’s approach to assessing and mitigating the risk of non-compliance with Welsh tax requirements (Part Two); and
  • the cost of administering Welsh income tax. We provide assurance on the accuracy and fairness of these amounts in the context of costs incurred by HMRC (Part Three).


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