Background
Each year, the Comptroller & Auditor General publishes separate statutory reports on devolved income tax matters for the Scottish Parliament and Senedd (Welsh Parliament). The Scottish Parliament and Senedd have powers to determine the tax bands and rates (excluding the personal allowance) paid by Scottish and Welsh taxpayers respectively on all non-savings, non-dividend income. Funding for the Scottish and Welsh governments includes any devolved income tax revenues.
The Scottish income tax regime first diverged from the rest of the UK in 2018-19 when it expanded from a three-band to a five-band system and widened further in 2024-25 with the introduction of a sixth rate band. Some rate band thresholds also differ.
For Welsh taxpayers, since April 2019, the UK Government has reduced UK income tax rates by 10 percentage points and the Senedd has had the power to apply Welsh rates in addition. To date, the Senedd has set Welsh rates of income tax at 10%, meaning that income tax rates for Welsh taxpayers are exactly the same as for taxpayers in England.
Scope
Under the statue, the Comptroller & Auditor General is required to report on:
- whether HMRC has adequate rules and procedures to ensure the assessment and collection of devolved income tax and whether it is complying with them
- whether HMRC has correctly calculated and estimated devolved income tax amounts. For the 2025-26 reports, we report on the outturns for the previous year, 2024-25
- whether the expenses reimbursed to HMRC for administering devolved income tax are accurate and fair
NAO team
Director: Peter Morland
Study Manager: Natalie Low