Welsh Budget announcement

Highlights for businesses from the BudgetThe Welsh budget was announced on 10 December. The key decisions for Welsh businesses and individuals were as follows:Welsh Rates of Income TaxThe Welsh rates of income tax for 2025/26 will remain at 10p for the three income tax rates (Basic, higher and additional). This means that Welsh taxpayers will pay the same income tax as those in England and Northern Ireland.Land transaction taxIn disappointing news for purchasers, the higher residential rates of Land Transaction Tax (LTT) are being increased by one percentage point across all bands. This change was made almost immediately, coming into force on 11 December.Purchasers who have already exchanged contracts prior to this date will pay the former rates provided they comply with transitional rules.The result of this change is that the higher residential rates of LTT are now five percentage points above the main residential rates.The current starting threshold for the main residential rates of LTT remains at £225,000. The government estimates that around 60% of residential transactions are below the threshold for paying LTT.The Budget also includes the intention to limit multiple dwellings relief (MDR) available on purchasing two or more dwellings in Wales. The changes will mean that taxpayers subject to the subsidiary dwelling exemption (SDE) will pay the main residential rates on the total consideration, without the benefit of MDR. It appears that this will not be the only change to MDR, as the relief will be further considered over the next year.It was also announced that the new LTT special tax sites relief that currently applies to the Celtic Freeport will also be extended to the Ynys Môn Freeport. Senedd approval will be sought on these in January so that the relief is in place when the UK government’s designation regulations come into force.Landfill Disposals TaxThe standard rate of Landfill Disposals Tax (LDT) will be increased to £126.15 per tonne from 1 April 2025. This matches the increase made to the UK government’s equivalent Landfill Tax.The lower rate of LDT will be increased to £6.30 per tonne. This means that the lower rate will be 5% of the standard rate, just under double the existing rate.The new approach to lower rate setting, as well as the substantial increase for next year, is designed to increase the incentive to reduce landfill waste disposals. The intention is to raise the rate further if the volumes of lower-rated waste disposals by way of landfill do not reduce in line with Welsh government objectives. The goal is to become a zero-waste nation by 2050.The unauthorised rate remains at 150% of the standard rate, and so increases to £189.25 per tonne.If you would like any help in understanding how the Welsh Budget will affect your business or personal situation, please call us at any time and we would be happy to help you!