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1. Key messages

The latest (2023) third-party data assurance exercise found that HMRC’s residency information is between 98 to 99% accurate. HMRC will re-run the exercise in 2025.

The majority of employers operate C tax codes correctly. However, a minority of employers (between 2 to 3%) omit the ‘C’ prefix and operate a UK tax code instead.

The total amount of Non-Savings Non-Dividend Income Tax paid by Welsh taxpayers in 2023 to 2024 was £6.9 billion, an increase of 14.1% compared to 2022 to 2023.

The final outturn of Welsh Rates of Income Tax (WRIT) in 2023 to 2024 was £2 billion, an increase of 13.4% compared to 2022 to 2023.

There were approximately 1,584,200 Welsh taxpayers who contributed towards this by having some net Income Tax liability on their Non-Savings Non-Dividend income, an increase of 6.1% compared to 2022 to 2023.

2. Purpose

The Government of Wales Act 2006 enables the Senedd (Welsh Parliament) to set a Welsh basic, higher, and additional rate of Income Tax to apply to the non-savings and non-dividend income of Welsh taxpayers. This power was first used in respect of the 2019 to 2020 tax year, and the rates continued to remain the same as the UK rates for the 2024 to 2025 tax year.

Welsh Rates of Income Tax (WRIT) works by reducing the UK Income Tax rates by 10p in £1.ÌýWRITÌýis charged on top of these reduced rates, and can be lower, higher or the same as the UK rates.

The Income Tax Personal Allowance remains reserved to the UK Parliament.

Welsh Rates of Income Tax in 2024 to 2025

Bands	Rates	Taxable income
Basic rate	20%	£12,571 - £50,270
Higher rate	40%	£50,271 - £125,140
Additional rate	45%	£125,141+

HM Revenue and Customs (HMRC) administersÌýWRITÌýthrough existing Pay-As-You-Earn (PAYE) and Self Assessment processes, including through existing approaches to Income Tax compliance and communications. This ensures the correct amount of tax is collected, and in the vast majority of cases Welsh taxpayers will notice no difference in howÌýHMRCÌýinteracts with them.

This report sets out information aboutÌýHMRC’s administration ofÌýWRITÌý³¦´Ç±¹±ð°ù¾±²Ô²µ:

• identification and assurance of Welsh taxpayers
• compliance activity
• the collection of and accounting forÌýWRITÌý°ù±ð±¹±ð²Ô³Ü±ð²õ
• data forÌýWRITÌýrate setting and forecasting
• customer service and support
• governance and oversight ofÌýWRIT
• the costs of deliveringÌýWRITÌýand recharging of these costs to the Welsh Government

3. Identification and assurance

Who is a Welsh taxpayer?

For most people, whether they are a Welsh taxpayer in a given tax year is straightforward. Individuals who live in Wales and have their sole or main place of residence there, are Welsh taxpayers. Those whose sole or main place of residence is located elsewhere in the UK are not Welsh taxpayers.

If a person has more than one place of residence, their main place or places of residence determines where they pay Income Tax. If a person has 2 or more ‘main places of residence’ in different parts of the UK, they will be a Welsh taxpayer if their main place of residence was in Wales for more of the year than any other part of the UK.

Members of the Senedd who represent constituencies in Wales are also Welsh taxpayers, regardless of their residency. As they are not subject to the normal residency rules, we operate a separate process to ensure they have the correct residency status applied on our system.

Identification and assurance work

The National Audit Office’s (NAO) report on the Administration ofÌýWRITÌýhighlights, in paragraph 12 of the Key Findings, that identifying Welsh taxpayers is the key challenge ofÌýHMRC’s administration ofÌýWRITÌýin 2023 to 2024. There is no definitive data set of Welsh residents against which to judge success, but we are confident in our identification of Welsh taxpayers as detailed below.

HMRCÌýhas built a new longitudinal dataset covering the incomes and location of UK taxpayers over a 12-year period from tax year ending 2010 to tax year ending 2022. The Welsh population is not static, and the dataset is used to look at trends on the number of individuals moving to/from Wales and rest of UK (England, Northern Ireland and Scotland).

The analysis showed that Wales exhibited a similar trend in net migration to Scotland, with numbers fluctuating between -300 and +1,500 up to tax year ending 2017. Net migration to Wales then increased steadily from tax year ending 2017 due to an increase in numbers of taxpayers moving from the rest of the UK to Wales. Figures from the dataset suggest that in 2021 to 2022, an estimated 70,000 taxpayers moved across the border. About 40,000 of these moved from the rest of UK to Wales and about 30,000 in the other direction. The number of individuals moving will not be the same every year.

Identifying Welsh taxpayers is an on-going process, and we work closely with the Welsh Government to ensure this remains robust.

Third-party data assurance exercise

HMRCÌýengages an external supplier to carry out a third-party data assurance exercise. This compares data held byÌýHMRCÌýwith that from the third-party to assess the accuracy ofÌýHMRC’s address data with respect to the identification of Welsh taxpayers. Under our current arrangements with the Welsh Government, we conduct the data assurance exercise every 2 years. The latest report is available in Annex A, Third-Party Data Assurance Exercise 2023.

Data updates

Postcodes and the properties within them, occasionally change to reflect new build properties and subdivision of existing properties.ÌýHMRCÌýreceives quarterly postcode updates from the Office of National Statistics and updates its processes for flagging Welsh residency to ensure ongoing accuracy ofÌýHMRC’s record of postcodes and their residency statuses.

Quarter	Number of new postcodes
Quarter 1	158
Quarter 2	115
Quarter 3	120
Quarter 4	125
Full year	518

Postcode scans

HMRCÌýconducts scans to identify any data quality issues and make corrections. There will always be the need to assure the quality of the data we receive, and this is not an issue specific toÌýWRIT. Our address data comes from a variety of sources, including individuals, employers, and other government departments. There are no issues with the vast majority of the address data recorded on our systems, however a small minority requires correcting.

HMRCÌýrelies on data from external sources to complete our records. We have a program of work in place to ensure that any data issues for Welsh taxpayer records are identified and corrected, preventing any loss of revenue to the Welsh Government.

The scan to assure the quality of our address data operates in 2 parts:

• identification of taxpayer records with a Welsh postcode prefix but where the postcode is not recorded onÌýHMRC’s list of live and deleted Welsh postcodes
• identification of taxpayer records with a blank postcode but which has a key word in the body of the address that indicates it is a Welsh postcode, for example, Cardiff

Results of the scan in 2024 to 2025

Type of error	Employment and pension	Change from 2023 to 2024
Invalid postcode	499	+21%
Blank postcode	210	-46%

Although there has been a small increase in the number of invalid postcodes, this remains a very small percentage of Welsh postcodes. This is in comparison to the number of Welsh taxpayers which totalled to 1,584,200 in the 2023 to 2024 tax year, all of whom will have a postcode.ÌýHMRCÌýmonitors trends in this data and keeps its approach to data assurance under review.

HMRCÌýcorrected all address records with invalid and blank postcodes where an individual had an employment or pension income. This ensures that the Welsh Government does not lose any tax as a result of data quality issues.

Communications

Communication is crucial to our efforts to accurately identify Welsh taxpayers.ÌýHMRCÌýhas continued to use the extensive existing communication channels to reinforce key messages onÌýWRITÌýto employers and individuals. Communications to individuals have been through channels including online social media, the Personal Tax Account, and the Annual Tax Summaries. These communications have focused on the need for customers to update their address details withÌýHMRCÌýwhen they move.

HMRC’s communications with employers have been through channels including the Employer Bulletin, Agent Update, Customer Compliance Managers’ engagement with large businesses and public bodies, forums for employers, payroll managers and agents, ÒÁÈËÖ±²¥, and online social media. These communications have focused on reminding employers of the importance of them correctly applying the ‘C’ codes issued to them byÌýHMRC.

Employers’ application of Welsh tax codes

°Â³ó±ð²ÔÌýHMRCÌýidentifies an individual inÌýPAYEÌýas a Welsh taxpayer, a tax code is issued to their employer for them to operate. All tax codes for Welsh taxpayers have a ‘C’ prefix. The vast majority of employers operate the codes issued to them. However, a small minority make errors and operate codes without the ‘C’ prefix.

Individuals affected by these errors are still identified as Welsh taxpayers byÌýHMRC, and the correct amount of tax is paid to the Welsh Government. There is therefore no loss of revenue to the Welsh Government, as we use our identification to calculate theÌýWRITÌýoutturn. As Welsh and rest of UK rates currently are the same, no one pays the wrong amount of tax as a result of this error. This would change if the rates were to diverge, although end of year reconciliation would ensure that any over- or under-payments were corrected. If rates were to differ, it would be important that codes are correctly applied in year to minimise the under- or overpayments that taxpayers would face at that end of year reconciliation.

HMRCÌýsupports employers to correctly apply the Welsh codes issued to them. We carry out regular scans to monitor the proportion of employments that are missing the ‘C’ prefix.

Employments missing the ‘C’ prefix

Month	% of employments missing the ‘C’ prefix in 2024-25	% of employments missing the ‘C’ prefix in 2023-24	% of employments missing the ‘C’ prefix in 2022-23	% of employments missing the ‘C’ prefix in 2021-22
April	2.34%	2.27%	2.27%	2.59%
July	Data unavailable	2.61%	2.56%	2.02%
October	Data unavailable	2.49%	2.44%	2.11%
January	Data unavailable	2.48%	2.36%	2.32%

Data for July 2024, October 2024 and January 2025 is unavailable. This scan was decommissioned in May 2025. The Chief Digital Information Office department is building a new report.Ìý

The issue of employers not applying the codes issued to them byÌýHMRCÌýis much broader thanÌýWRIT and may reflect wider challenges employers are facing in operatingÌýPAYE. In many cases, an employer failing to apply ‘C’ codes arises from a software error or missing update.

Our approach to tackling missing ‘C’ prefixes therefore focuses on reminding, educating, and supporting employers to correctly apply the codes issued to them. Where this is not happening, we reissue codes to employers to notify them of the error and, where possible in cases where employers are continually getting this wrong, we contact the employer to understand why and help them to get it right.

This approach has successfully reduced the error rate for employments missing the ‘C’ prefix from around 10% in 2019 to 2020 to around 2.34% in April 2024. We will continue to work with the Welsh Government and employers to maintain the error rate at a low level.

4. Compliance

Compliance checks into tax affairs of Welsh taxpayers

HMRCÌýapplies risk-based compliance activity to the collection ofÌýWRITÌýin the same way as is applied to the collection of Income Tax from taxpayers in the rest of the UK. The Welsh Government is not recharged for this activity.

HMRCÌýlooks at compliance risks over multiple years in order to take the most appropriate compliance action.

WRITÌýremains aligned with England and Northern Ireland so there is currently no differential that might drive a risk of behavioural change in Welsh taxpayers.

Address assurance

For all individuals, whether in Self Assessment orÌýPAYE,ÌýHMRCÌýmonitors cross-border migration trends through comparison of the customer base, analysis of tax returns and changes to tax accounts to identify possible evidence of customer behavioural response.

HMRCÌýalso validates the accuracy of reported moves and the completeness of its address data.ÌýHMRCÌýwill continue communications activity to customers, reinforcing the need to update address details withÌýHMRCÌýwhen they move.

Building insight

There is no differential betweenÌýWRITÌýand UK rates, soÌýHMRCÌýdoes not expect to see behaviour change related toÌýWRIT.ÌýHMRCÌýcontinues to undertake compliance activity into Welsh taxpayers for areas other thanÌýWRIT, and if that work shows any trends in behaviour that could also be relevant toÌýWRITÌýcompliance that will be considered in future periods.

Wealthy individuals

HMRCÌýcontinues to use its existing Customer Compliance Manager model and other interactions with wealthy customers to raise awareness, educate customers about theirÌýWRITÌýobligations and assess compliance risk related to misrepresentation of Welsh taxpayer status or understatement of income liable toÌýWRIT.

Timing

In addition to the Real Time Information Reviews carried out in-year, the end of yearÌýPAYEÌýreconciliation programme checks the tax deducted against the tax due for all customers. Any underpayments are collected from the customer, usually through an adjustment to the subsequent year’sÌýPAYEÌýcode, and any overpayments are refunded.

Self-employed customers are on an annual return cycle and Self Assessment returns for 2023 to 2024 tax year were not required to be submitted until January 2025. Compliance checks on 2023 to 2024 returns would therefore generally commence in 2025, although enquiries may be opened earlier for returns submitted before the deadline.

The majority of enquiries into 2023 to 2024 returns do not, however, begin immediately after the submission of returns as assessments of risk must take place first.

5. WRITÌý°ù±ð±¹±ð²Ô³Ü±ð²õ, rate setting and forecasting

HMRC collects WRIT through the PAYE and Self Assessment systems. It paysÌýWRITÌý°ù±ð±¹±ð²Ô³Ü±ð²õ into the UK Consolidated Fund and these revenues are subsequently transferred to the Welsh Government and the Welsh Government’s resource block grant is reduced accordingly, reflecting its revenue-raising powers.

In July 2025ÌýHMRCÌýreleased a statistical publication,ÌýWRITÌýOutturn Statistics 2023 to 2024, which included the information shown in theÌýHMRCÌýaccounts and further breakdowns ofÌýWRITÌýand equivalent information for taxpayers in the rest of the UK. The outturn is calculated following the submission deadline for Self Assessment returns, meaning there is a delay between the end of the tax year and the publication of the outturn for that year. The 2024 to 2025 outturn will not be published until 2026.

WRITÌýoutturn 2023 to 2024

For 2023 to 2024, the total amount of Income Tax revenue from Welsh taxpayers was £6.9 billion, includingÌýWRITÌýrevenue of £3 billion attributable to the Welsh Government budget.

The first table below shows the total revenue from Income Tax on Non-Saving/Non-Dividend (NSND) income for Welsh taxpayers and for rest of UK (rUK, representing English and Northern Irish) taxpayers in 2023 to 2024.

The second table below shows theÌýWRITÌýrevenue attributable to the Welsh Government budget from Income Tax onÌýNSNDÌýincome for Welsh taxpayers and comparable rest of UK taxpayers in 2023 to 2024 (for example 10p at the basic rate, 10p at the higher rate, and 10p at the additional rate). The tables also show the components of the figures.

2023 to 2024 Total Income Tax Revenue fromÌýNSNDÌýIncome of Welsh and non-Welsh Taxpayers

Revenue	°Â±ð±ô²õ³óÌýNSNDÌý(£²ú¾±±ô±ô¾±´Ç²Ô)	rUKÌýNSNDÌý(£²ú¾±±ô±ô¾±´Ç²Ô)	Welsh share of total UKÌýNSND
Self Assessment established liability	2.260	122.474	1.7%
PAYEÌýestablished liability	4.716	103.855	4.0%
Estimated further liability: late tax returns and compliance yield	0.135	6.202	2.0%
Less: adjustment for uncollectable amounts	(0.037)	(1.402)	2.4%
Relief at Source	(0.102)	(2.595)	3.5%
Gift Aid	(0.066)	(1.416)	4.1%
Final revenue for tax year 2023 to 2024	6.905	227.119	2.7%

2023 to 2024ÌýWRITÌýand comparableÌýrUKÌýNSNDÌýIncome Tax

Revenue	°Â±ð±ô²õ³óÌýNSNDÌý(£²ú¾±±ô±ô¾±´Ç²Ô)	rUKÌýNSNDÌý(£²ú¾±±ô±ô¾±´Ç²Ô)
Self Assessment established liability	0.823	36.999
PAYEÌýestablished liability andÌýPAYEÌýSettlement Agreements	2.194	46.256
Estimated further liability	0.053	2.015
Less: adjustment for uncollectable amounts	0.017	0.602
Relief at Source	0.051	1.298
Gift Aid	0.033	0.708
Final Revenue for the tax year 2023 to 2024	2.968	82.662

The time lag in confirming the actualÌýWRITÌýoutturn amount for 2023 to 2024 is due to theÌýPAYEÌýand Self Assessment processes.

To administerÌýPAYEÌýfor taxpayers,ÌýHMRCÌýundertakes an end of year reconciliation to assess whether individuals have paid too much or too little tax in any given tax year. Similarly, taxpayers are not required to submit online Self Assessment returns toÌýHMRCÌýuntil 10 months after the end of the tax year to which they relate.

Data forÌýWRITÌýrate setting and forecasting

HMRCÌýhas worked closely with the Welsh Government to develop an agreed work plan. This details the analysis and data thatÌýHMRCÌýwill provide to the Welsh Government to support them in their analytical work. Officials meet regularly to ensure new priorities are discussed and factored in against existing commitments. As part of this, both parties have agreed what new information would be useful to help provide more understanding of theÌýWRITÌýoutturn.

HMRCÌýprovides the Welsh Government with relevant data forÌýWRIT. At a UK level, these tasks are fulfilled using the Survey of Personal Incomes (SPI).

TheÌýSPIÌýis compiled to provide a quantified evidence base from which to cost proposed changes to tax rates, personal allowances and other tax reliefs for Treasury Ministers. It is used to inform policy decisions withinÌýHMRCÌýand HM Treasury, as well as for tax modelling and forecasting purposes.

TheÌýSPIÌýis based on information held byÌýHMRCÌýon individuals who could be liable to UK tax. It is carried out annually byÌýHMRCÌýand covers income assessable to tax for each tax year. Not all of the individuals are taxpayers because the operation of personal reliefs and allowances may remove them from liability. Where income exceeds the threshold for operation ofÌýPAYE, the survey provides the most comprehensive and accurate official source of data on personal incomes.

HMRCÌýprovides the Welsh Government with an updated copy of theÌýSPIÌýdata set annually. This copy was identical to that used, for similar purposes, at a UK level, with the exception of some minor aggregation of taxpayer data at the highest income levels to avoid potential breaches of taxpayer confidentiality.ÌýHMRCÌýcontinues to work with the Welsh Government and the Office for Budget Responsibility (OBR) to ensure the information provided meets their requirements and supports forecasting and rate setting for Wales.

From 2019 to 2020, with the introduction ofÌýWRIT, there has been a reduction in the Welsh Government’s resource block grant. This is equivalent to 10 percentage points from each tax rate of non-savings non-dividend Income Tax generated from Welsh taxpayers, uplifted using the mechanism set out in the fiscal framework agreed between the UK and Welsh Government in December 2016.

Each year, both the tax receipts generated and the block grant deduction will initially be based on a forecast and then reconciled to actual receipts collected which will become known around 15 months after the end of the financial year in question.

HMRCÌýmust provide the Welsh Government with sufficient data to discharge its duties in respect of cash management linked to any change between forecast and collected amounts ofÌýWRIT. To fulfil this requirementÌýHMRCÌýhave agreed with the Welsh Government to provideÌýWRITÌýfigures from the Real Time Information (RTI) data received from employers. This is the best indication of trends in Income Tax liabilities available in real time but is not a complete picture of Income Tax liabilities because it excludes tax paid through Self Assessment (and some adjustments made toÌýPAYEÌýliabilities) after the end of the tax year.

HMRCÌýworks closely with the Welsh Government to ensure we provide them with the required analysis.ÌýHMRCÌýdelivered a variety of analytical outputs onÌýWRITÌýfor the Welsh Government since last year’s annual report, including:

• publishingÌýWRITÌýandÌýrUKÌýoutturn for 2023 to 2024
• producing forecasts ofÌýWRITÌýandÌýrUKÌýIncome Tax for theÌýOBRÌýatÌý andÌý
• evaluating December 2021 and March 2022 forecasts for 2022 to 2023ÌýWRITÌýfor theÌýOBR, feeding into theÌýÌýand 2024
• producing the Provisional Estimate for 2024 to 2025ÌýWRITÌýfor HMRC’s annual report and accounts 2024 to 2025
• sharing Income Distribution Analysis for the 2023 to 2024ÌýWRITÌýoutturn
• delivering monthly Real Time Information data onÌýPAYEÌýtaxpayers
• updating the Welsh Government’sÌýÌýwith the latest outturn data andÌýOBRÌýmacroeconomic forecasts
• analysis of Sole Traders and Partnerships in Wales andÌýrUKÌýfor 2022 to 2023
• sharing the Public Use Tape (PUT) version of the 2022 to 2023 Survey of Personal Incomes

6. Customer service and support

HMRCÌýapplies the same level of customer service, support and transparency to Welsh taxpayers as is applied to Income Taxpayers in the rest of the UK.

HMRCÌýadministersÌýWRITÌýas part of the UK Income Tax system. In the vast majority of circumstances Welsh taxpayers will therefore notice no difference in the wayÌýHMRCÌýinteracts with them. This approach also ensures that the correct amount of tax is collected.

WRITÌýis collected through existingÌýPAYEÌýand Self Assessment processes, which have been adapted to reflectÌýWRITÌýrates. Welsh taxpayers can useÌýHMRC’s usual guidance and customer contact channels for advice and information.

In the majority of areas customer service provided to Welsh taxpayers will therefore be included and reported withinÌýHMRC’s UK-wide customer service reporting.

The customer service and support for Welsh taxpayers, agents and employers thatÌýHMRCÌýhas incorporated into its existing processes includes the following:

• providing all Welsh taxpayers and their employers with Welsh tax codes prior to the start of the tax year
• annual tax summaries issued to all Welsh taxpayers
• updating online calculators prior to the start of the tax year with theÌýWRITÌýrates set by the Senedd to ensure they remain accurate for Welsh taxpayers
• guidance for payroll software providers on how to correctly incorporate Welsh rates into theirÌýPAYEÌýproducts for employers
• guidance on how Welsh taxpayer status is decided and what to do if customers feelÌýHMRCÌýhas wrongly identified their status
• encouraging customers to update their personal details, focusing on the use of Personal Tax Account
• issuing paper tax tables to digitally exempt employers prior to the start of the tax year reflecting Welsh rates

While most interactions Welsh customers have withÌýHMRCÌýare via existing processes, and the customer service therefore reported within UK figures, some aspects of customer service are specific toÌýWRIT. For example, guidance on Welsh taxpayer status and ability to discuss withÌýHMRCÌýdisagreements over the Welsh residency status given.

It is important thatÌýHMRCÌýcan demonstrate that its customer service in these areas matches what it provides across the UK as a whole. The Service Level Agreement (SLA) betweenÌýHMRCÌýand the Welsh Government therefore commitsÌýHMRCÌýto collect and report on key,ÌýWRITÌýspecific, customer contact metrics. The key metrics for 2024 to 2025 are outlined in Annex C to this report, the Annual Business Intelligence Report.

Welsh language service

HMRCÌýhas a well-established Welsh language service that is more than 30 years old and delivered under the 1993 Welsh Language Act. Approximately 40 full-time staff are employed for Welsh language work.

HMRCÌýdelivers the majority of its Welsh language services using 2 dedicated teams of Welsh speakers based in Porthmadog and Cardiff. They provide customer service support and translation services, as well as helping other areas ofÌýHMRCÌýwith Welsh language issues. There is also a designated Welsh speaking senior manager for Welsh language who is based in Cardiff and is the first point of contact for all things Welsh language inÌýHMRC.

Welsh language customer support forÌýWRITÌýis supported by both teams in various ways.ÌýHMRCÌýalso offers a Welsh language customer service option from the main Income Tax helpline.ÌýHMRCÌýreceives around 24,000 calls from Welsh language customers each year across all our customer services.

7. Governance and oversight

Governance arrangements

The governance arrangements in place forÌýHMRC’s administration ofÌýWRITÌýensure that we are fulfilling our obligations and meeting the needs of the Welsh Government.ÌýHMRC’s administration ofÌýWRITÌýis governed jointly byÌýHMRCÌýand the Welsh Government, and we work closely with them to ensure that there is sufficient oversight of our administration ofÌýWRIT.

Service Level Agreement (SLA)

OurÌýSLA with the Welsh Government sets outÌýHMRC’s obligations for administeringÌýWRIT, and the performance measures for monitoring this. It ensures a consistent quality of service to Welsh taxpayers and allowsÌýHMRCÌýand the Welsh Government to meet their respective responsibilities.

TheÌýSLAÌýis reviewed annually byÌýHMRCÌýand the Welsh Government. For the 2024 to 2025 tax year the SLA was updated to include a confidentiality agreement setting out how HMRC will treat sensitive policy information shared by the Welsh Government.

The signatories to theÌýSLAÌýinÌýHMRCÌýand the Welsh Government meet twice a year to reviewÌýHMRC’s progress in administeringÌýWRIT.

WRITÌýBoard

TheÌýWRITÌýBoard meets quarterly to reviewÌýHMRC’s administration ofÌýWRIT. It is comprised of representatives from bothÌýHMRCÌýand the Welsh Government, drawing its membership from areas acrossÌýHMRCÌýwhich have a key role to play in our administration ofÌýWRIT. Chairing responsibilities are shared betweenÌýHMRCÌýand the Welsh Government.

In 2024 to 2025, theÌýWRITÌýBoard discussed a range of matters related toÌýHMRC’s administration ofÌýWRIT. This included approving the methodology for calculating the 2023 to 2024 Welsh outturn, approving the costs to be recharged to the Welsh Government, agreeing the proposed changes to theÌýSLA, and reviewing the Compliance Plan for 2024 to 2025.

During the 2024 to 2025 tax yearÌýWRITÌýBoard hybrid meetings alternated between London and Cardiff.

Devolved Analytical Working Group

The Devolved Analytical Working Group is comprised of representatives fromÌýHMRC, the Welsh Government, the Scottish Government, and theÌýOBR, and the Scottish Fiscal Commission.

The working group meets regularly, and discusses, among other things, the methodologyÌýHMRCÌýuses to calculate theÌýWRITÌýoutturn, and other analytical work carried out byÌýHMRCÌýfor the Welsh and Scottish Governments.

Financial arrangements

Under the Fiscal Framework Agreement between the UK and Welsh Government, the Welsh Government reimbursesÌýHMRCÌýfor net additional costs wholly and necessarily incurred as a result of the implementation and administration ofÌýWRIT.

HMRCÌýhas a robust process in place to ensure that we accurately identify the costs of administeringÌýWRIT. We ensure we provide the Welsh Government with sufficient evidence to allow the Welsh Government to assure itself of the accuracy of the costs to be recharged.

As part of this process, we have a Rechargeable Costs Framework to set out our approach to and obligations for recharging costs to the Welsh Government. This is annexed to theÌýSLAÌýand is reviewed annually.

We provide the Welsh Government with a report each month to ensure they have a timely view of the costs to be recharged, which happens on a quarterly basis. An invoice is only raised once theÌýWRITÌýBoard is satisfied that the costs are accurate.

In 2024 to 2025, the costs recharged to the Welsh Government byÌýHMRCÌýfor the administration ofÌýWRITÌýwere:

CostsÌýHMRCÌýrecharged to the Welsh Government forÌýWRITÌýadministration in 2024 to 2025

Quarter (£ million)	Implementation and operating costs
Quarter 1	0.08
Quarter 2	0.08
Quarter 3	0.13
Quarter 4	0.08
Full year	0.47

HMRCÌýrecharges both the costs of implementing and the costs of operatingÌýWRIT. Implementation costs were the initial costs of setting upÌýHMRC’s administration ofÌýWRIT, whilst operating costs are the day-to-day costs of this administration.

The charts below show the historic costs of implementing and operatingÌýWRITÌýthat have been recharged to the Welsh Government, and how implementation costs have, over time, reduced. If the Welsh Government were to make further changes toÌýWRIT, there would likely be further implementation costs.

Costs of implementing and operatingÌýWRITÌýrecharged to the Welsh Government in previous years

Cost	2024-25 (£million)	2023-24 (£million)	2022-23 (£million)	2021-22 (£million)	2020-21 (£million)	2019-20 (£million)	2018-19 (£million)	2017-18 (£million)
Implementation costs	Not applicable	Not applicable	Not applicable	Not applicable	0.19	1.77	5.44	0.29
Operating costs	0.47	0.43	0.42	0.44	0.53	0.23	Not applicable	Not applicable
Total cost ofÌýWRITÌýinvoiced in financial year	0.47	0.43	0.42	0.44	0.72	1.60	5.80	0.34

Note: For ‘total cost ofÌýWRITÌýinvoiced in financial year’, figures shown may not be an exact sum of implementation and operating costs due to invoicing schedules.

External scrutiny

In addition to the internal governance structure agreed byÌýHMRCÌýand the Welsh Government,ÌýHMRC’s administration ofÌýWRITÌýis also overseen by several external bodies.

The National Audit Office

TheÌýNAOÌýauditsÌýHMRC’s administration ofÌýWRITÌýannually. In January 2025, theÌý. Paragraph 11 of the Key Findings reported that ‘HMRCÌýhas adequate rules and procedures in place to ensure the proper assessment and collection ofÌýWRITÌýand it is complying with those rules.’

TheÌýNAOÌýdid not make any recommendations for improvement, and their positive assessment ofÌýHMRC’s administration ofÌýWRITÌýprovides us with assurance that we are fulfilling our obligations and maintaining a high level of service to both the Welsh Government and Welsh taxpayers.

TheÌýNAO’s report intoÌýHMRC’s administration ofÌýWRITÌýin 2024 to 2025 is expected to be published in January 2026.

The Senedd

HMRCÌýadministersÌýWRITÌýon behalf of the Welsh Government, and as such is also accountable to the Senedd for our performance in doing so. As part of the implementation ofÌýWRIT,ÌýHMRCÌýappointed an Additional Accounting Officer, who is available to give evidence to committees of the Senedd. The current Additional Accounting Officer is Jonathan Athow, Director General for Customer Strategy and Tax Design.

8. Forward Look 2025 to 2026

Welsh Income Tax Powers Review

In March 2025, the Welsh Government announced they were commissioning an external review of Welsh Income Tax powers. HMRC will continue to support Welsh Government if there are any changes to the direction of WRIT. If WRIT rates diverge from the UK rates, HMRC will discuss compliance approaches with the Welsh Government.

Annex A: Third-Party Data Assurance Exercise 2023

Outcome of the Third-Party Data Clash matching exercise

Table 1a: GB Group unmatched records removed by KAI

GB Group unmatched records	Number removed by KAI
Duplicates	2,540
Deceased	2,143
Under 18	59,149
Resident abroad	7,532

Table 1b: GB Group unmatched records matched by KAI

GB Group unmatched records	Number matched by KAI
Matched to Wales	594,156
Matched to rUK	10,779
Unmatched	107,826

Table 1c: GB Group unmatched records totals matched by GBG and KAI and percentage adjusted totals

GB Group unmatched records	Total matched by GBG and KAI	% adjusted total
Matched to Wales	2,835,760	95.84%
Matched to rUK	15,396	0.52%
Unmatched	107,826	3.64%

Methodology

Knowledge, Analysis and Intelligence (KAI) sent GB Group approximately 88 million records sourced from CID (Citizen Identification Framework), as part of assurance of HMRC address data.

In order to provide assurance of HMRC address data, GB Group performed a matching exercise of the CID records against third party data sources, e.g., the electoral register and credit records.

Following the completion of this exercise, GB Group sent KAI reports outlining the number of records successfully matched to a country, the number of contradictory address records (by country) and the number of records that are not matched to any address in third party data.

Alongside this report, GB Group sent KAI a list of NINOs (National Insurance numbers) and TRNs (Temporary Reference numbers)[1] that did not match to a third-party source.

KAI seek to corroborate these records and identify their most recent address/country information in HMRC tax data. This is performed by:

• removing duplicate NINOs and TRNs from the initial list
• matching the records to a number of HMRC systems i.e., CESA/NPS and RTI to identify: deceased individuals, individuals under 18 (at the time the GB Group matching exercise was performed) and individuals residing abroad
• records which are identified as deceased, under 18 or residing abroad are removed from the initial unmatched list
• remaining records that match to HMRC systems are assigned to a region/country based upon a valid postcode and the corresponding GOR (region)/ITL2 region associated with the postcode. This is obtained by matching extracted postcodes to a postcode lookup table for GOR Codes and assigning a corresponding Income Tax Regime region based on the first letter of this variable

Results for GB Group matching exercise

Of 3,030,346 Welsh records:

• 2,241,604 (73.97%) records were matched to a Welsh address that had a Welsh address in CID
• 4,617 (0.15%) records were matched to an rUK address but had a Welsh address in CID
• 784,125 (25.88%) Welsh records were not matched to any address

For cases b), a letter was sent to the individual asking them to update their address data.

GB Group also found 6,128 records in the CID data with an rUK address but matched to a Welsh address in the third-party data. These individuals were also sent a letter asking them to update their address.

Results for KAI matching exerciseÌý

As outlined, KAI matched the 784,125 uncorroborated records to HMRC systems and:

• removed 2,540 duplicate NINOs/TRNs from the initial list
• removed 59,149 records where the individual was under the age of 18 when the data clash was carried out (38 were under 16, 29,858 were 16 and 29,253 were 17)
• removed 7,532 records where the individual was identified as residing abroad
• removed 2,143 records where the individual was identified as deceased
• identified 594,156 records where the individual had a Welsh GOR Code (83.36% of the initial, adjusted unmatched list)
• identified 15,396 records where the individual had an rUK GOR Code

We were unable to corroborate 107,826 records. Of these:

• 103,569 (96.05%) were TRNs which is 3.50% of the adjusted list of 2,835,760 Welsh records sent to GB Group (with duplicates, deceased, under 18 and overseas cases excluded)
• 4,257 (3.95%) were NINOs

See table 1 for further detail.

Conclusion

After the completion of both KAI’s and GB Groups’ components of this third-party matching exercise, it is shown that HMRC’s taxpayer status was correct in 95.84% of cases (when duplicates, deceased and overseas cases are excluded). However, when considering cases where a match was made, 2,835,760 out of 2,851,156 cases were matched as Welsh (99.46% of the adjusted total).

Therefore, across the two stages, only 0.54% of these records were identified as residing in rUK when CID provided a Welsh address. And just 107,826 (3.64%) of the total list in CID remain uncorroborated, with most (96.05%) of these being TRNs.

When considering this figure in the context of the overall accuracy of HMRC’s identification of Welsh taxpayers it is important to bear in mind that this population does not correspond to distinct, active Welsh taxpayers in any single given year. It represents records (as opposed to individuals) held in HMRC’s CID data, which could be historic accounts that are no longer active; or TRNs which belonged to individuals that have subsequently been allocated a NINO. So, an uncorroborated taxpayer status doesn’t mean an incorrect taxpayer status.

We are therefore confident that the proportion of correctly identified Welsh cases in HMRC’s will likely be around 98%-99% when we only consider records which are currently active in Self Assessment or RTI. The uncorroborated cases are likely to be in respect of ceased or inactive accounts which explains why KAI have been unable to identify them in either the Self Assessment or RTI data. There may also be some cases where postcode information has been incorrectly input, or an expired postcode has been input meaning that a GOR Code cannot be allocated to the record. Therefore, there is no risk to WRIT of failing to corroborate these records as Welsh since there will be no Income Tax liability for them.

This gives confidence that HMRC will have correctly identified around 99% of currently active Welsh taxpayers from our CID data as living in Wales.

Annex B: Annual Business Intelligence Report 2024 to 2025

Customer contact: telephone

HMRCÌýhas aÌýWRITÌýtelephone route within theÌýHMRCÌýPersonal Tax helpline. This gives customers generic pre-recordedÌýWRITÌýmessages prior to speaking to anÌýHMRCÌýCustomer Advisor. These figures do not represent all calls by Welsh taxpayers toÌýHMRC.

Phone calls received and answered

Total	2024 to 2025	2023 to 2024	2022 to 2023	2021 to 2022	2020 to 2021
Calls received	21	35	87	92	120
Calls answered	17	23	63	70	83

Web pages monitored

HMRC has a number of WRIT-related webpages on ÒÁÈËÖ±²¥ and hits to these pages are monitored:

• Income Tax in Wales
• HMRCÌýinternal manual: Welsh taxpayer technical guidance
• °Õ±ð±ô±ô HMRC about a change in personal details, which is used by customers across the UK

Web hits

Web page on ÒÁÈËÖ±²¥	Web hits in 2024 to 2025	Web hits in 2023 to 2024	Web hits in 2022 to 2023	Web hits in 2021 to 2022	Web hits in 2020 to 2021
Income Tax in Wales	32,314	38,953	44,444	39,827	43,337
Internal manual: Welsh taxpayer guidance	67	75	186	178	283
TellÌýHMRCÌýabout a change to your personal details	754,848	1,072,096	1,307,931	1,332,067	1,530,708

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[1] A Temporary Reference Number (TRN) is a number that is allocated by HMRC to records that do not have a matched or known National Insurance Number (NINO). TRNs take the format ‘NN LN NN NN’ (two numbers, a letter, five numbers). TRNs are usually replaced when an individual applies for a NINO from DWP. However, a small number of individuals retain a TRN.