Wales can set its own income tax rates on earnings, signalled by a C tax code. For 2025/26 it has chosen to match England exactly, but the power to diverge is real.
Wales, like Scotland, has a measure of control over income tax, but it has used that power very differently. Since 2019 the Senedd has been able to set a Welsh Rate of Income Tax on the earnings of Welsh taxpayers. So far it has chosen to keep rates exactly in line with England, but the machinery to diverge is built in, and your C tax code shows you are inside it.
The mechanism is deliberately simple. Westminster reduces each main UK income tax rate by 10 percentage points for Welsh taxpayers: basic rate becomes 10%, higher rate 30%, additional rate 35%. The Senedd then sets a "Welsh rate" to add back on top of each. For 2025/26 the Senedd set that Welsh rate at 10p, so:
| Band | UK rate minus 10p | Welsh rate added | Effective rate |
|---|---|---|---|
| Basic | 10% | 10% | 20% |
| Higher | 30% | 10% | 40% |
| Additional | 35% | 10% | 45% |
Add them up and Welsh taxpayers face 20%, 40% and 45%, the same as England and Northern Ireland. The difference is purely constitutional: a slice of your income tax is now decided in Cardiff.
Unlike Scotland, Wales does not set its own tax bands or thresholds. The Personal Allowance (£12,570), the higher-rate threshold (£50,270) and the additional-rate threshold (£125,140) are all UK-wide figures in 2025/26. Savings interest and dividends are also taxed at UK-wide rates. This is why the contrast with Scottish income tax, which has six bespoke bands, is so stark: Wales currently produces an identical outcome to England, while Scotland produces a materially different one.
Rhys lives in Cardiff and earns £45,000 in 2025/26. He is a Welsh taxpayer with a C1257L code.
After his £12,570 Personal Allowance, he has £32,430 of taxable income. All of it falls in the basic-rate band (which runs to £50,270), taxed at the effective Welsh basic rate of 20%:
| Item | Amount |
|---|---|
| Salary | £45,000 |
| Personal Allowance | £12,570 |
| Taxable income | £32,430 |
| Welsh basic-rate tax (20%) | £6,486 |
Rhys pays £6,486, precisely what an English taxpayer on £45,000 would pay, because the 10p Welsh rate keeps the totals aligned. You can model your own Welsh take-home using the salary calculator.
There is no application process. HMRC works out Welsh taxpayer status from the residential address it holds, in the same way it does for Scotland. If your main home is in Wales for the majority of the tax year, you are a Welsh taxpayer and your code gains a C prefix, for Cymru, such as C1257L. Working in England while living in Wales does not change this. Keeping your address current with HMRC ensures the right prefix and rates are applied. You can see how the prefixed codes work in our guide to Welsh tax codes.
Welsh income tax is power held in reserve: the rates match England today, but the C on your code means a slice of your tax is now Cardiff's to set.
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