Wales Specialist Reference Group
The Wales Reference Group aims to provide our members with news and updates regarding developments in Welsh Law and the legal services industry in Wales. In addition, there will be consultations regarding developments in Wales, and members of the Wales Reference Group will also have the opportunity to voice their opinions and help us develop our policy and make meaningful representations.
Furthermore, members of the Wales Reference Group will have the opportunity to contact CILEx and report changes or provide information regarding developments in the law or legal services industry in Wales that may affect our members, and whenever possible, this information will be shared with the other members in the group.
Thank you to the members who have already signed up to form part of the Wales Reference Group. If you are not currently a member of the group, but wish to join, please email email@example.com with your full name and your membership number.
Please note that membership of the Wales Reference Group is not restricted to members living or working in Wales. If you have any interest in the developments in the law or legal services industry in Wales please do register your interest.
Below are summaries of the most recent communications shared with the existing members of the Wales Reference Group.
Income Tax in Wales
Welsh rates of income tax will be introduced from April 2019. This follows the Wales Act 2014, the agreement of a fiscal framework in December 2016 and the recent passage of the Wales Act 2017 in January.
Responsibility for many aspects of income tax will remain with the UK government, and the tax will continue to be collected by HMRC for Welsh taxpayers.
What will change?
Each year from 2019-20 onwards, the National Assembly for Wales will decide whether to vary the rates of income tax paid by Welsh taxpayers or whether to keep them the same as the income tax rates paid by English and Northern Irish taxpayers.
The financial year beginning in April 2019 will be the first year in which the income tax rates paid by Welsh taxpayers will be affected by decisions made by the National Assembly about income tax.
What will stay the same?
Income tax will still be collected by HMRC for Welsh taxpayers.
The personal allowance – the amount people can earn before they start paying tax – will continue to be the same as it is in England, Northern Ireland and Scotland.
The point at which people start to pay the higher and additional rates of income tax will stay the same as in England and Northern Ireland.
Responsibility for taxing income from savings and dividends will remain with the UK Government.
What will be the process for setting Welsh rates of income tax?
From April 2019, the UK Government will reduce each of the three rates of income tax – basic, higher and additional rates – paid by Welsh taxpayers by 10p. The National Assembly for Wales will then decide the Welsh rates of income tax which will be added to the reduced UK rates.
The combination of the reduced UK rates and the new Welsh rates of income tax will determine the overall rate of income tax paid by Welsh taxpayers.
If the National Assembly sets each of the Welsh rates of income tax at 10p, this will mean the rates of income tax paid by Welsh taxpayers will continue to be the same as those paid by English and Northern Irish taxpayers. The Scottish Parliament decides income tax rates for Scottish taxpayers.
If the National Assembly set Welsh rates of income tax at less than 10p Welsh taxpayers will pay less than those paid by English and Northern Irish taxpayers. If the National Assembly set Welsh rates of income tax at more than 10p Welsh taxpayers will pay more than those paid by English and Northern Irish taxpayers.
For further information regarding Welsh income tax please consult the Welsh Government website here.
The Wales Act 2017
Devolution in Wales was previously constructed under a ‘deferred powers model’ of legislative competence. Meaning that the National Assembly for Wales had power to legislate only within the subjects that were specifically devolved to them. Areas that were not devolved to the Welsh Assembly were reserved for Westminster.
The Wales Act 2017 received Royal Assent on 31 January 2017, and as a result of which significant changes were made to the devolution settlement for Wales. Perhaps the biggest change is that the Act introduces a ‘reserved powers model’ of legislative competence. The National Assembly for Wales will have the power to legislate on any subject other than those which are specifically reserved to the UK Parliament (as underpins the devolution settlement in Scotland). So, instead of telling The National Assembly for Wales what it can do, it sets out the things that it can’t.
Some have argued that the Wales Act 2017 provides The National Assembly for Wales and The Welsh Government with greater powers. For example The National Assembly for Wales and The Welsh Government will have greater powers in relation to how the Assembly Works, Tax, Roads and Transport and Energy and the Environment.
The Wales Act 2017 also implements a number of key recommendations of the Silk Commission. For example there is a declaratory provision recognising the National Assembly for Wales and the Welsh Government as permanent parts of the United Kingdom’s constitutional arrangements.
Alun Cairns, Secretary of State for Wales, said ‘The Wales Act 2017 delivers what I’ve always intended – a clearer, stronger and fairer devolution settlement for Wales based on a reserved powers model.’
However the Wales Act 2017 has been rather controversial with some seeking to argue that The National Assembly for Wales and The Welsh Government has actually lost some of its powers. The reservation list is long and details up 200 areas in which powers are fully or partially reserved. The list of reservations show that whilst The National Assembly for Wales and The Welsh Government has gained some powers, it has also lost others. For example Employment will be a reserved area in the future.
Their Assembly group chair for Plaid Cymru Dai Lloyd said “This is an undemocratic bill which represents a significant roll-back of powers. Plaid Cymru cannot, in good conscience, support a bill which undermines the democratic will of people in Wales who voted for more powers in the 2011 referendum.”
If you are interested in learning more about the Wales Act 2017 and what it could mean for you please do visit The UK Parliament website here where a copy of the Wales Act 2017 cab be accessed.
Alternatively a brief overview of the Wales Act is provided by Wales Online Wales Online and an interesting discussion is provided by Geldards Law Firm.
There will also be an article featured in the April Edition of the CILEx Journal in which will provide further detail.
The Welsh Revenue Authority
The Tax Collection and Management Act (Wales) 2016, which was passed by the National Assembly in April 2016 provides the Welsh Government with powers to collect and manage taxes.
The Welsh Government is setting up a new public body, the Welsh Revenue Authority, which will lead on and be responsible for collecting Welsh taxes. From April 2018 this will include Land Transaction Tax and Landfill Disposals Tax. The Welsh Revenue Authority will be operational by 2018.
For further information regarding the Welsh Revenue Authority please see the Welsh Government website.
Land Transaction Tax
From April 2018, Land Transaction Tax will replace UK Stamp Duty Land Tax in Wales. Like UK Stamp Duty Land Tax, Land Transaction Tax will be payable when you buy or lease a building or land over a certain price.
The Land Transaction Tax legislation will broadly be consistent with UK Stamp Duty Land Tax.
Decisions on tax rates will be made closer to April 2018 to reflect economic conditions at that time. The research paper ‘Land Transaction Tax: Setting rates and bands’ outlines some of the issues in setting the rates and bands for Land Transaction Tax and can be viewed on the Welsh Government Website.
Higher rates of Stamp Duty Land Tax on purchases of additional residential properties (including second homes) came into effect on 1 April 2016. Following a technical consultation carried out in Wales between July and August 2016, the higher rates will also apply in Wales as part of the Land Transaction Tax legislation.
For more information and to access other publications in relation to the Land Transaction Tax please visit the Welsh Government Website.
Landfill Disposal Tax
From April 2018 Landfill Disposal Tax will replace Landfill Tax. Landfill Disposal Tax will be a tax on the disposal of waste into landfill and will be charged by weight. It will be payable by landfill site operators, who pass on these costs to waste operators through their gate fee.
The devolution of Landfill Tax will support Welsh Government policies, including the ambitious goal of zero waste.
The Wales Act 2014 provides for the partial devolution of income tax. The National Assembly for Wales would then set Welsh Rates of Income Tax, which means Income Tax rates in Wales could be different to other parts of the UK in the future.
At present, introduction of Welsh Rates of Income Tax is subject to a referendum, however this could be removed via the Wales Bill currently before Parliament.
The Form and Accessibility of the Law applicable in Wales
The Law Commissions recommendations for the future of the legal system in Wales.
The Law Commission is a statutory body set up by Act of Parliament in 1965 with the task of reviewing the law of England and Wales and making recommendations for its simplification and modernisation, and indeed consolidation. The Law Commission is a public body, however it is independent from Government.
As a result of the Wales Act 2014 the Welsh Government has the authority to refer projects to the Law Commission directly without the intervention of Whitehall.
The Law Commission will not undertake a project unless the referring Government assures them that they have a serious intention of making law reform in the area in question. Accordingly the Law Commission’s recommendations indicate that Welsh Government are minded to make law reform in these areas.
The Law Commissions main recommendation as outlined in their report was that legislation within the competence of the Assembly should be brought on to the Assembly statute book. The Assembly should stop its current practice of simply amending Westminster Statutes in relation to Wales, for example in the way that it did with the Planning (Wales) Act, which makes extensive amendments in Wales to the Town and Country Planning Act of 1990. Instead the Assembly should repatriate the whole legislation within an Assembly statute so that all the law applying in Wales can be found in one place, otherwise known as “codification”.
Secondly, the Law Commission proposed that the integrity of the code should be preserved for the future. When the Assembly want to change or add to the law, rather than pass a new standalone statute, they should amend or add to the Code. This would make it possible for an individual to view the code, for example via a website free of charge, to find whatever it is they are looking for all in one place, in an up to date version, with of course access to the previous versions.
Currently the people of Wales have access one free database, legislation.gov.uk, which is maintained by the National Archives. However the website is not up to date with the incorporation of amendments into the statutes. There’s a warning on the website to the effect that “this statute is not up to date”, however it doesn’t tell you where to find the correct statute, it just warns you not to rely on what it’s offering you. Accordingly the Law Commission has also recommended that the legislation.gov.uk website be kept up to date.
In summary the Law Commission recommended that existing resources such as the legislation.gov.uk website and the Law Wales/Cyfraith Cymru website should be used for codification of Welsh law, which is kept up to date, making the law more accessible all.
The Law Commissions full report The Form and Accessibility of the Law applicable in Wales can be viewed here.
In addition a 20 page summary of the report can be viewed here.