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Wales to get power to levy tax on landlord income

mark drakeford

Politicians have backed a proposal to set separate Welsh rates of property income tax, despite fears that it could deter investment.

Senedd members agreed to support the UK government in introducing the power which they were told could take effect in the 2027-28 tax year. It follows the Chancellor’s Budget announcement of new separate tax rates for property income from April 2027, with the property basic rate of 22%, a higher rate of 42%, and an additional rate of 47%.

Finance secretary Mark Drakeford (pictured) explained the amendment in the Finance (No. 2) Bill would empower the Senedd to set specific rates for the Welsh property rates in addition to the existing Welsh rates. He told MSs: “As a result, the Welsh rates of income tax will become two separate rates - one for income that is not property, savings or dividends, and the other for the Welsh property rates.”

Income

In 2023-24, property income accounted for 1.6% of non-savings, non-dividend income in Wales, meaning that about £50 million would be raised by separating income derived from property.

Drakeford said the Welsh Government supported devolution of this additional power to the Senedd. “It will be a step in the direction of the Senedd having income tax powers that can be more effectively used to support the Welsh Government’s priorities and the ambitions of the people of Wales.”

Opposed

However, Welsh Conservatives opposed the move. Sam Rowlands MS said additional taxes weren’t always the right way to improve services or outcomes. “Those taxes can put off investment, they can undermine local businesses, and they can shift the burden onto ordinary families already feeling the squeeze from rising living costs.”

The UK Government plans to introduce a mansion tax in England from 2028, applying to most residential properties valued at more than £2 million, and has agreed to investigate whether the Welsh Government could make a similar decision in the country.

Tags:

Wales
Landlord tax

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