Welsh Rate of Income Tax - What should payroll staff do?

From 6th April 2019 anyone whose primary address is in Wales will pay tax under the new Welsh Rate of Income Tax (WRIT). What can HR and Payroll staff do to help employees through this transition?

While there should be very little for payroll staff to do to facilitate this change, some companies may wish to take a proactive approach to educating and supporting their staff through this transition.

What can you do?

The main task for payroll staff is to ensure all tax codes for affected employees have been updated in your payroll systems (so, business as usual for payroll teams!). However if you wish to take a more proactive approach outside this, then you are also well positioned to help employees to take action to update their address with HMRC to ensure they are on the correct tax code from the start.

In-house payroll teams

In-house teams will be able to easily identify staff who will be affected. You may want to consider running some communications to staff encouraging them to ensure that their current address is up-to-date in your records, and ideally that they also use the Government Gateway to update their address direct with HMRC.

We've produced an employee-facing guide to help you explain the changes to your staff, which is available to download here.

If you are a business based in Wales but with staff who live in England, then you may also need to explain to these employees that it is their residential address, rather than the address of the company they work for, that decides which rate of income tax they fall under.

Outsourced payroll teams

You may be able to identify payroll clients who are either based in Wales, or near the Welsh border, and are therefore likely to have staff living in Wales. If you have a lot of clients in this situation then you may want to consider putting some information in your client newsletters, or perhaps sending more information to your clients with their next payroll reports - for them to send on to their employees.

PayDashboard's employee-facing guides to the Welsh Rate of Income Tax are ideal for this.

Download your Welsh Rate of Income Tax guide here.

What else is going on that we should be aware of?

Payroll software companies will already be working to ensure that the new tax rates and tax codes prefix letter "C" are built into their software in time for April 2019. If your software requires you to download updates to access new functionality then you may need to look out for communications from your supplier as to when you can download the latest version containing these updates.

HMRC have begun a communications programme to build awareness around these changes, and employees will soon start receiving their 2019 tax codes with the new "C" prefix (for "Cymru").

Should any of the information issued change prior to April 2019, we will update these guides and resend them to anyone who has previously downloaded them.