HMRC mix-up sees Welsh workers pay Scottish income tax

Workers in Wales have been incorrectly paying Scottish rates on income tax after the HMRC applied the wrong code.

It is not known how many people have been paying the wrong tax.

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Since the beginning of April, all Welsh taxpayers should have had a C for Cymru in their tax codes but HMRC said some employers incorrectly gave them tax codes with S for Scotland. This means some people ended up paying too much tax, while others underpaid.

A statement from the HMRC said: “We have been made aware of an error in the application of new income tax codes for Welsh taxpayers by some employers which has meant some taxpayers paid the incorrect amount of tax in April.

“It is the responsibility of the employer to apply the tax codes provided by HMRC and we are working closely with the employers affected and providing support as they investigate and correct the problem.”

People with an income of £12,501 to £14,549 will need to pay more tax as the Scottish rate is 19% while in Wales it is 20%, while anyone earning more than £24,945 to £43,430 would have paid 1% more than they should have.

Those on £43,431 to £50,000 would have paid 21% extra, while anyone over £50,001 would have been overcharged by 1%.

Chair of the National Assembly’s Finance Committee, Llyr Gruffydd AM, added: “HMRC’s admission is deeply disappointing as this Committee was repeatedly given assurances that mistakes like this would not happen. We raised concerns about the flagging process for identifying Welsh taxpayers during our inquiries into fiscal devolution and the Welsh Government’s draft budget.

“On each occasion we were told the matter was in hand and the lessons from the devolution of income tax powers to Scotland, where there were similar issues, had been soundly learned and would be put into effect. We are seeking an immediate explanation of how this has happened and will be asking representatives from HMRC to appear before this Committee in the near future.”

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