Welsh taxpayers

Who can be a Welsh taxpayer

Only individuals can be Welsh taxpayers.

You should make sure that HMRC have the correct and up-to-date address for you – this will help to ensure the question of Welsh taxpayer status is dealt with correctly.

How to know if you are a Welsh taxpayer

The definition and tests for determining who is a Welsh taxpayer are contained in law.

The definition of a Welsh taxpayer is based around where an individual lives during a tax year. Welsh taxpayer status applies for a whole tax year (a tax year runs from 6 April to 5 April so the 2024/25 tax year runs from 6 April 2024 to 5 April 2025), although if you are entitled to split year treatment under the Statutory Residence Test, the non-UK income relating to the overseas part of the year will not be within the scope of UK or Welsh income tax. You cannot be a Welsh taxpayer for only part of a tax year and a non-Welsh UK taxpayer for the other part.

For most individuals, the question of whether or not they are a Welsh taxpayer is straightforward – either:

• they live in Wales and are a Welsh taxpayer; or
• they live elsewhere in the UK and are not a Welsh taxpayer.

Make sure HMRC have an up-to-date address for where you are living.

You must follow the Welsh taxpayer test to work out whether you are a Welsh taxpayer. If you pay tax under Pay As You Earn (PAYE), HMRC will make the initial decision, which you can appeal. If you pay tax under self assessment, you must decide whether you are a Welsh taxpayer and indicate this on your tax return if you file online. There is more information on this under Decisions about Welsh taxpayer status below.

PAYE codes for Welsh taxpayers

If you have a PAYE code, and you are a Welsh taxpayer, your code should have the prefix ‘C’ – it is a ‘C’ code, for example, a typical tax code would be C1257L. You can find your PAYE code on a PAYE coding notice, your form P60 and your payslips, or online via your Personal Tax Account.

Contact HMRC if:

• your PAYE code for 2024/25 is not a ‘C’ code and you think it should be; or
• your PAYE code for 2024/25 is a ‘C’ code and you think it should not be.

Welsh taxpayer status

To determine whether you are a Welsh taxpayer for a particular tax year, you must follow these steps.

First, you must be a UK resident for tax purposes for that tax year, under the Statutory Residence Test (including where split year treatment applies).

Second, you must satisfy any one of three conditions:

• you have a ‘close connection’ with Wales (see heading Close connection below); or
• you do not have a ‘close connection’ with any part of the UK but in that tax year you spend more days in Wales than in any other part of the UK; or
• you are a Welsh Parliamentarian for the whole or any part of the tax year.

The location of your work duties, your employer or your pension provider is not directly relevant for determining Welsh taxpayer status. Nor is it relevant whether you regard yourself as being Welsh. Welsh taxpayer status is not a matter of choice.

The conditions under the second part of the test are assessed over the whole tax year, even if you are eligible for split year treatment under the Statutory Residence Test.

Close connection

There are two separate tests for determining whether you have a ‘close connection’ with a part of the UK. Which test applies depends on how many places of residence you have in the UK during the year.

One place of residence in the UK

If you only have one place of residence in the UK in a tax year (which may be in any part of the UK and may be for all or part of the year), and you live there for at least part of the year, you have a close connection with that part of the UK. So, if this is the case and your only place of residence (in the UK) is in Wales, you are a Welsh taxpayer.

Two or more places of residence in the UK

If you have two or more places of residence in the UK during a tax year, whether or not at the same time, you have to consider which of these is your ‘main place of residence’ at every point throughout the tax year.

If you only have a single place of residence at any one time but you move house (however many times) in the tax year, it will be clear where your ‘main place of residence’ is at every point. However, if you have two or more residences at the same time, you must consider which of these is your ‘main place of residence’.

You are deemed to have a close connection with Wales, if your main place of residence is located in Wales for at least as long as it is in any other single part of the UK.

You must consider each part of the UK for which you have a residence separately: Wales, Scotland, Northern Ireland and England.

It is important not to get confused: a ‘close connection’ is only defined as regards a part of the UK, not a residence. Similarly, your ‘main place of residence’ refers to a home or dwelling, not a part of the UK.

It is therefore possible to have a ‘close connection’ to Wales through this part of the test even if your ‘main place of residence’ is in Wales for less than half of the tax year.

Similarly, it is possible to spend more days in a single place of residence in Wales than any other single place of residence yet not be a Welsh taxpayer. See the examples in the HMRC manuals on GOV.UK.

Place of residence

The term ‘place of residence’ is not defined in the legislation. HMRC interpret the term as equivalent to ‘home’ or dwelling in which you habitually live. Ultimately, whether somewhere is a place of residence depends on the facts.

For somewhere to be a place of residence, you must actually live there, even if only occasionally or for a short period of time.

You do not have to own the place – you can rent it, or your employer can provide it to you.

A place of residence does not have to be a house, flat or other building; it can be a boat, caravan, or mobile home for example. A hotel can also be a place of residence.

There are a few properties which straddle the Welsh-English border, in which case HMRC will use information from the Ordnance Survey data to decide which side of the border the property resides in.

Main place of residence

If you have more than one place of residence in the UK, you have to consider which of them is your ‘main place of residence’. Again, the law does not define this term.

Your main place of residence is not necessarily the residence where you spend the most nights, although it often is. HMRC consider it to be the place of residence with which you have the strongest connection.

Again, the facts of each case will ultimately be decisive.

Day counting

When you count days for the purposes of Welsh taxpayer status, the basic rule is that you spend a day in a particular part of the UK if you are in that part of the UK at midnight (the end of the day).

If you do not have a ‘close connection’ with any part of the UK, you must count the number of days you spend in each part of the UK. To be a Welsh taxpayer using day counting, you must spend more days in a tax year in Wales than you spend in either Scotland, Northern Ireland or England. You must compare days spent in Wales to days spent in each part of the UK separately. It is therefore possible to have a ‘close connection’ with Wales under this part of the test even if you spend less than half the year in Wales.

Moving house

It is important that you tell HMRC your new address whenever you move house. This means you will receive important notices from HMRC and HMRC can assess your Welsh taxpayer status.

The same tests apply in terms of deciding whether you are a Welsh taxpayer.

If you move house during the tax year, this means you are likely to have more than one place of residence in the UK in the tax year. If both places of residence are in the same part of the UK, say Wales, then you add together the time spent in those places of residence, when considering the ‘close connection’ or day-counting tests.

If you move house to a different part of the UK, this may affect your Welsh taxpayer status. Note that you are a Welsh taxpayer for a whole tax year – however, HMRC can re-assess your status during the tax year as circumstances change.

Your Welsh taxpayer status for a particular tax year can only be known with absolute certainty once the tax year has ended. But the PAYE system requires HMRC to determine Welsh taxpayer status in advance, based on the information in their possession. So, if you are a PAYE taxpayer, your tax code:

• may become a ‘C’ code mid-year, if you move to Wales, such as C1257L; or
• cease to be a ‘C’ code, if you leave Wales. Scottish tax codes have an ‘S’ prefixing the tax code, such as S1257L and UK tax codes have no letter prefixing the code, for example 1257L.

HMRC will change your tax code to try to ensure the correct tax is collected by the end of the tax year. The change in your tax code does not mean that you are only a Welsh taxpayer for part of the tax year.

If you are a self assessment taxpayer, you will submit a tax return following the end of the tax year and can assess your Welsh taxpayer status with the benefit of hindsight.

Decisions about Welsh taxpayer status

How Welsh taxpayer status is decided – and amended if necessary – depends on whether you pay tax under PAYE or self assessment.

Pay As You Earn (PAYE) taxpayers

If you pay tax under the PAYE system (that is, you are an employee or you receive pension income taxed under PAYE), in the first instance, HMRC decide whether you are a Welsh taxpayer.

Prior to the start of each tax year, HMRC issue PAYE codes to your employer or pension provider. If HMRC think you are a Welsh taxpayer, they will give you a PAYE code known as a ‘C’ code – this means it starts with the letter ‘C’ – for example, a typical tax code will be C1257L. This tells your employer or pension payer to apply Welsh income tax rates. HMRC do not issue a PAYE coding notice to you simply to tell you about the ‘C’ code – you only receive a coding notice showing your ‘C’ code if you have a separate change in your tax position that triggers the issue of a coding notice – for example, you have a new source of untaxed income to include in your tax code. You are still able to check what your tax code is by looking at your payslip, or via your Personal Tax Account.

If you receive a 'C' code, but you do not agree with HMRC, you can appeal against their decision. There is information on how to appeal on the page Appealing a tax decision.

If you are not given a 'C' code and you do not pay tax under self assessment but you consider yourself a Welsh taxpayer then you should contact HMRC. You should make sure they have your up-to-date address.

New Starters

If you start a new job during the tax year, your employer may have to operate an emergency tax code, until HMRC process your new starter information and provide your employer with an up-to-date tax code for you. Even if you are a Welsh taxpayer, if your employer operates an emergency tax code, this will be a rest-of-UK tax code, without a 'C' prefix.

Self assessment taxpayers

If you do not pay tax under the PAYE system and submit an annual self assessment tax return, you must decide whether you are a Welsh taxpayer (that is, you need to self-assess your status). Online tax returns for 2019/20 onwards include a box which you must tick if you think you are a Welsh taxpayer.

The normal rules for self assessment apply, in that HMRC can enquire into your tax return (normally up to 12 months after the date of submission). They may therefore ask questions to see if they agree or disagree with your decision.

Record-keeping

With respect to your Welsh taxpayer status, you may need to keep records that can establish whether somewhere is your place of residence or main place of residence. You may also need to keep records of days spent in Wales and elsewhere.

You should keep records relating to Welsh taxpayer status for at least 22 months after the end of the tax year. For 2024/25, this means that you should keep records until at least 31 January 2027.

If you complete a self assessment tax return and are self-employed, you should keep all records relating to your tax return (including Welsh taxpayer status) for at least five years after the submission deadline of the relevant tax year (so almost six years after the end of the tax year). For 2024/25, you should keep records until at least 31 January 2031.

Evidence that points to somewhere being your place of residence could include utility bills and council tax bills.

For individuals who think they might not be able to establish easily where their main place of residence is, we suggest keeping a diary of where you are each midnight, so that there is evidence available for day counting.

More information

HMRC have published guidance on Welsh taxpayer status on GOV.UK:

• General guidance for taxpayers;
• Technical guidance aimed at tax advisers and HMRC.