What’s New in Welsh Taxes in 2025?

The Welsh government has rolled out new tax updates for 2025 to strike a balance between boosting the economy, protecting the environment and promoting fairness for individuals and businesses. 

Wales' new tax changes balance stability with progress, keeping income tax rates unchanged while raising taxes on waste disposal, property transactions and certain businesses. The adjustments encourage responsible financial and environmental practices like higher landfill taxes to boost recycling and property tax changes to reflect market trends. 

Welsh Rates of Income Tax (WRIT)

Welsh Income Tax rates will stay the same for the 2025/26 tax year. The Welsh Government will continue setting its portion at 10%, keeping rates in Wales the same as in England and Northern Ireland.

In simple terms, that 10% is added to the base rates set by the UK Government, leading to the following total tax rates for people in Wales:

• Basic Rate - 20% (10% UK base + 10% Welsh rate)
• Higher Rate - 40% (30% UK base + 10% Welsh rate)
• Additional Rate - 45% (35% UK base + 10% Welsh rate)

Landfill Disposals Tax (LDT)

Wales has long prioritised environmental sustainability, and the upcoming changes to the LDT will reinforce that commitment. From 1 April 2025, landfill tax rates will rise sharply to discourage waste disposal and promote recycling.

• Lower Rate – This is increasing from £3.30 to £6.30 per tonne.
• Standard Rate – This is rising from £103.70 to £126.15 per tonne.
• Unauthorised Disposal Rate – This rate has now been set at 150% of the standard rate. Thus, this is increasing from £155.55 to £189.25 per tonne.

The higher taxes are meant to encourage businesses and individuals to manage waste in a more eco-friendly manner.

Land Transaction Tax (LTT)

Starting from 11 December 2024, the higher residential LTT rates (which apply to property purchases in Wales) rose by 1%, but the other tax bands stayed the same. The adjustment mainly affects buyers of higher-value properties in areas with high prices.

The Welsh Government is also reviewing LTT reliefs. A consultation in April 2024 suggested ending Multiple Dwellings Relief (MDR) from 1 June 2024, but after considering feedback, it decided not to make any immediate changes. Instead, the government is keeping the option open for future reforms.

Another update is the restriction on combining MDR with the Subsidiary Dwelling Exception (SDE). Starting 7 February 2025, new rules stop MDR claims for transactions affected by the SDE.

The Welsh Government is also considering introducing relief for transactions in special tax sites. If approved, it could help boost certain areas focused on economic development.

Non-Domestic Rates (NDR)

As for NDR (or business rates), the rate multiplier will rise from 56.2p to 56.8p in 2025/26. This might feel like an added burden for businesses, but the government has introduced some measures to help.

Retail, leisure and hospitality businesses will continue to receive a 40% NDR relief in 2025/26, with a cap of £110,000 per business. The support is important for sectors that have been hit hard in recent years. And a new fund is being created to help small and medium-sized businesses in those sectors invest in future-proofing their operations.

The Welsh government is also proceeding with larger reforms to make the non-domestic rates system fairer, including plans for three-yearly property revaluations and improvements to rating list management.

Visitor Levy: A New Way to Support Tourism

Tourism plays an important role in Wales' economy and the new visitor levy seeks to support the industry while helping local communities. The Visitor Accommodation (Register and Levy) Etc. (Wales) Bill, introduced in November 2024, lets local councils charge a fee on overnight stays in tourist accommodations.

• For campsites and hostels, the levy is 75p per person, per night
• For all other types of accommodation, the levy is £1.25 per person, per night

The money raised will help local councils improve infrastructure and services, making the visitor experience better and protecting Wales' natural and cultural treasures.

Conclusion

The Welsh tax changes for 2025 aim to support the economy, the environment and fairness. Income Tax rates will stay the same but landfill disposal taxes will rise to promote recycling.

New reliefs will also help businesses and tourism. Although some sectors may face higher costs, the goal is to create a fairer economy for Wales in the long run.