Skip to content

Financial reform and tax policy

Funding arrangements for the Welsh Government are changing.

The UK Government published the Wales Bill on 20 March 2014. The purpose of the Bill is to devolve taxation and borrowing powers to the Welsh Government and National Assembly for Wales. This is as a result of the UK Government’s acceptance of the majority of recommendations published in the 1st Silk Commission report.

The Wales Bill aims to fully devolve:

  • Non-domestic rates (also known as ‘Business Rates’)
  • Stamp duty land tax
  • Landfill tax

The first of these taxes to be devolved will be Non-domestic rates, which will take effect in Wales from April 2015. Stamp duty land tax and landfill tax require the passage of the Wales Bill through the UK Parliament and have a target date of April 2018. From that date, UK versions of the taxes will be “turned off” and replacement Welsh taxes will come into effect.

Devolving taxes to Wales enables us to develop a tax system that is simpler, fairer and supports jobs and growth. It allows us to take decisions affecting the Welsh economy in Wales. The Tax Advisory Group for Wales and the Welsh Government Tax Forum have been set up to help Welsh Ministers achieve this.

Borrowing

The Wales Bill confirms that the Welsh Government will also acquire borrowing powers to invest in capital projects from 2018. Ministers will be able to borrow to invest in any devolved area of responsibility, up to a total limit of £500m. Early access to borrowing powers has been granted to help finance an enhancement to the M4, if Ministers decide to undertake such a project.

The Wales Bill also provides for up to £500m of borrowing to support revenue spending. This power will help manage budgetary fluctuations that occur as a result of tax devolution.

Further powers

The Finance Minister will continue to press for further powers for Wales, as recommended in the Silk report. These include:

  • Air Passenger Duty
  • A higher borrowing limit
  • The ability to vary income tax rates independently of one another.

The UK Government remains responsible for Stamp Duty Land Tax and Landfill Tax until April 2018. It may introduce changes to them prior to the introduction of replacement Welsh taxes.

Full details are available of the Wales Bill and Command Paper on GOV.UK (external link). View the UK Government response to the 1st Silk Commission report on GOV.UK (external link).

Document Download

PDF   Empowerment and Responsibility: Financial Powers to Strengthen Wales (File size: 2MB)