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Financial reform and tax policy

Funding arrangements for the Welsh Government are changing.

The Wales Act, which gained Royal Assent on 17 December 2014, devolves taxation and borrowing powers to the Welsh Government and National Assembly for Wales. This follows the UK Government’s acceptance of the majority of recommendations published in the 1st Silk Commission report.

The Wales Act fully devolves:

  • Stamp duty land tax
  • Landfill tax.

The Command Paper published alongside the Wales Bill gives a target date of April 2018 for the replacement Welsh taxes to come into effect. It also provides a date for full devolution of non-domestic rates (already partly devolved to Wales) in April 2015.

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 Act gives the Welsh Government 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.

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

Full details are available of the Wales Act 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)