Wales Bill (HL Bill 46)

116E Welsh taxpayers

(1) For any tax year, a Welsh taxpayer is an individual (T)—

(a) who is resident in the UK for income tax purposes for that year
(see Schedule 45 to the Finance Act 2013), and

(b) 5who, for that year, meets condition A, B or C.

(2) T meets condition A if T has a close connection with Wales (see section
116G).

(3) T meets condition B if—

(a) T does not have a close connection with England, Scotland or
10Northern Ireland (see section 116G), and

(b) T spends more days of that year in Wales than in any other part
of the UK (see section 116H).

(4) T meets condition C if, for the whole or any part of the year, T is—

(a) a member of Parliament for a constituency in Wales,

(b) 15a member of the European Parliament for Wales, or

(c) an Assembly member.

(5) Subsection (1) does not apply if T is a Scottish parliamentarian for the
whole or any part of the year (see section 116F).

(6) For the purposes of subsection (5) and section 116F, T is a Scottish
20parliamentarian if T is a member as described in any of paragraphs (a)
to (c) of section 80D(4) of the Scotland Act 1998 (definition of a Scottish
taxpayer).

(7) In this Chapter “the UK” means the United Kingdom.

116F Welsh taxpayers: Scottish parliamentarians

(1) 25An individual (T) who is a Scottish parliamentarian for the whole or
any part of a tax year is a Welsh taxpayer for that tax year if—

(a) T is resident in the UK for income tax purposes for that year (see
Schedule 45 to the Finance Act 2013),

(b) T meets condition C in section 116E for that year, and

(c) 30T meets either of the following conditions for that year.

(2) T meets the first condition if—

(a) the number of days in that year on which T is a member as
described in any of paragraphs (a) to (c) of section 116E(4),

exceeds

(b) 35the number of days in that year on which T is a Scottish
parliamentarian.

(3) T meets the second condition if—

(a) the number of days in that year mentioned in paragraphs (a)
and (b) of subsection (2) are the same, and

(b) 40T meets condition A or B in section 116E for that year.

116G Close connection with Wales or another part of the UK

(1) To find whether, for any year, T has a close connection with any part of
the UK see—

(a) subsection (2) (where T has only one place of residence in the
UK), or

(b) subsection (3) (where T has 2 or more places of residence in the
UK).

(2) 5T has a close connection with a part of the UK if in that year—

(a) T has only one place of residence in the UK,

(b) that place of residence is in that part of the UK, and

(c) for at least part of the year, T lives at that place.

(3) T has a close connection with a part of the UK if in that year—

(a) 10T has 2 or more places of residence in the UK,

(b) for at least part of the year, T’s main place of residence in the UK
is in that part of the UK,

(c) the times in the year when T’s main place of residence is in that
part of the UK comprise (in aggregate) more of the year than the
15times when T’s main place of residence is in each other part of
the UK (considered separately), and

(d) for at least part of the year, T lives at a place of residence in that
part of the UK.

(4) In this section “place” includes a place on board a vessel or other means
20of transport.

116H Days spent in Wales or another part of the UK

(1) T spends more days of a year in Wales than in any other part of the UK
if (and only if) the number of days in the year on which T is in Wales at
the end of the day exceeds each of the following—

(a) 25the number of days in the year on which T is in England at the
end of the day;

(b) the number of days in the year on which T is in Scotland at the
end of the day;

(c) the number of days in the year on which T is in Northern
30Ireland at the end of the day.

(2) T is treated as not being in the UK at the end of a day if—

(a) on that day T arrives in the UK as a passenger,

(b) T departs from the UK on the next day, and

(c) during the time between arrival and departure T does not
35engage in activities which are to a substantial extent unrelated
to T’s passage through the UK.

116I Supplemental powers to modify enactments

(1) The Treasury may by order modify section 11B of the Income Tax Act
2007 (income charged at the Welsh basic, higher and additional rates)
40for the purpose of altering—

(a) the definition of the income which is charged to income tax at
the rates provided for under the section, or

(b) the application of the section in relation to a particular class of
income which is so charged.

(2) 45The Treasury may by order modify any enactment not contained in
Chapter 2 of Part 2 of the Income Tax Act 2007 (rates at which income

tax is charged) so that it makes provision, in relation to a Welsh
taxpayer, by reference to the Welsh basic rate, the Welsh higher rate or
the Welsh additional rate, instead of the basic rate, the higher rate or the
additional rate.

(3) 5If the Treasury consider it necessary or expedient to do so, they may by
order provide that—

(a) a Welsh rate set by the Assembly for a tax year for the purpose
of calculating the Welsh basic rate, Welsh higher rate or Welsh
additional rate, or

(b) 10the fact that a Welsh rate has not been set by the Assembly for a
tax year for any one or more of those purposes,

does not require any change in the amounts repayable or deductible
under PAYE regulations between the beginning of that year and such
later date as may be specified in the order.

(4) 15The Treasury may by order make such modifications of any enactment
as they consider necessary or expedient in consequence of or in
connection with an order under subsection (1), (2) or (3).

(5) An order under this section may, to the extent that the Treasury
consider it to be appropriate, take effect retrospectively from the
20beginning of the tax year in which the order is made.

(6) No order is to be made under subsection (1), (2) or (4) unless a draft of
the statutory instrument containing it has been laid before, and
approved by a resolution of, the House of Commons.

(7) A statutory instrument containing an order under subsection (3) is
25subject to annulment in pursuance of a resolution of the House of
Commons.

(8) The power under subsection (1) does not include power to provide that
any income which is—

(a) savings income, or

(b) 30dividend income which would otherwise be charged to income
tax at a rate provided for under section 13 of the Income Tax Act
2007,

is income which is charged to income tax at a rate provided for under
section 11B of that Act.

116J 35Reimbursement of expenses

The Welsh Ministers may reimburse any Minister of the Crown or
government department for administrative expenses incurred by
virtue of this Chapter at any time after the passing of the Wales Act 2014
by the Minister or department.

116K 40Report by the Comptroller and Auditor General

(1) The Comptroller and Auditor General must for each financial year
prepare a report on the matters set out in subsection (2).

(2) Those matters are—

(a) the adequacy of any of HMRC’s rules and procedures put in
45place, in consequence of the Welsh rate provisions, for the
purpose of ensuring the proper assessment and collection of
income tax charged at rates determined under those provisions,

(b) whether the rules and procedures described in paragraph (a)
are being complied with,

(c) the correctness of the sums brought to account by HMRC which
relate to income tax which is attributable to a Welsh rate
5resolution, and

(d) the accuracy and fairness of the amounts which are reimbursed
to HMRC under section 116J (having been identified by it as
administrative expenses incurred as a result of the charging of
income tax as mentioned in paragraph (a)).

(3) 10The “Welsh rate provisions” are—

(a) any provision made by or under this Chapter, and

(b) any provision made by or under the Income Tax Acts relating to
the Welsh basic rate, the Welsh higher rate or the Welsh
additional rate.

(4) 15A report under this section may also include an assessment of the
economy, efficiency and effectiveness with which HMRC has used its
resources in carrying out relevant functions.

(5) “Relevant functions” are functions of HMRC in the performance of
which HMRC incurs administrative expenses which are reimbursed to
20HMRC under section 116J (having been identified by it as
administrative expenses incurred as a result of the charging of income
tax as mentioned in subsection (2)(a)).

(6) HMRC must give the Comptroller and Auditor General such
information as the Comptroller and Auditor General may reasonably
25require for the purposes of preparing a report under this section.

(7) A report prepared under this section must be laid before the Assembly
not later than 31 January of the financial year following that to which
the report relates.

(8) In this section “HMRC” means Her Majesty’s Revenue and Customs.”

9 30Welsh basic, higher and additional rates of income tax

(1) The Income Tax Act 2007 is amended in accordance with subsections (2) to (11).

(2) In section 6 (the basic rate, higher rate and additional rate), in subsection (3),
before paragraph (a) insert—

“(zb) section 6B (Welsh basic, higher and additional rates),”.

(3) 35Before section 7 insert—

“6B The Welsh basic, higher and additional rates

(1) The Welsh basic rate, the Welsh higher rate and the Welsh additional
rate for a tax year are calculated as follows.

Step 1

40Take the basic rate, higher rate or additional rate.

Step 2

Deduct 10 percentage points.

Step 3

Add the Welsh rate (if any) set by the National Assembly for Wales for
that year for the purpose of calculating the Welsh basic rate, the Welsh
higher rate or the Welsh additional rate (as the case may be).

5Add the Welsh rate (if any) set by the National Assembly for Wales for
that year for the purpose of calculating the Welsh basic rate, the Welsh
higher rate or the Welsh additional rate (as the case may be).

(2) For provision about the setting of the Welsh rates, see Chapter 2 of Part
4A of the Government of Wales Act 2006.”

(4) 10In section 10 (income charged at the basic, higher and additional rates:
individuals), in subsection (4), at the appropriate place, insert—

“section 11B (income charged at the Welsh basic, higher and additional
rates),”.

(5) Before section 12 insert—

“11B 15Income charged at the Welsh basic, higher and additional rates

(1) Income tax is charged at the Welsh basic rate on the income of a Welsh
taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the basic rate.

(2) 20Income tax is charged at the Welsh higher rate on the income of a Welsh
taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the higher rate.

(3) Income tax is charged at the Welsh additional rate on the income of a
25Welsh taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the additional rate.

(4) For the purposes of this section, “non-savings income” means income
which is not savings income.

(5) 30This section is subject to—

• section 13 (income charged at the dividend ordinary, upper and
  additional rates: individuals), and

• any provisions of the Income Tax Acts (apart from section 10)
  which provide for income of an individual to be charged at
  35different rates of income tax in some circumstances.

(6) Section 16 has effect for determining the extent to which the non-
savings income of a Welsh taxpayer would otherwise be charged at the
basic, higher or additional rate.”

(6) In section 13 (income charged at the dividend ordinary, upper and additional
40rates)—

(a) in subsection (1)(b), before “and” insert “or the Welsh basic rate,”,

(b)
in subsection (2)(b), before “and” insert “or the Welsh higher rate,”,

(c)
in subsection (2A)(b), before “and” insert “or the Welsh additional
rate,”,

(d)
45in subsection (3), at the end of the words in parenthesis, insert “or 11B”,
and

(e)
in subsection (4), at the end insert “or the Welsh basic, higher or
additional rate”.

(7) In section 16 (savings and dividend income to be treated as highest part of total

income), in subsection (1), after paragraph (za) insert—

“(zb) the rate at which income tax would be charged on the non-
savings income of a Welsh taxpayer apart from section 11B,”.

(8) In section 809H (charge on nominated income of long-term UK resident), after
5subsection (3A) insert—

“(3B) If the individual is a Welsh taxpayer for the relevant tax year, the
individual is to be treated for the purpose of calculating income tax
charged by virtue of subsection (2) as if the individual were not a Welsh
taxpayer for that year.”

(9) 10In section 828B (conditions to be met for exemption where individual resident
but not domiciled in the UK), in subsection (5), before “or the starting rate”
insert “, the Welsh basic rate”.

(10) In section 989 (definitions for the purposes of the Income Tax Acts), at the
appropriate place, insert—

• 15““Welsh additional rate” means the rate of income tax of that name
  calculated in accordance with section 6B,”,

• ““Welsh basic rate” means the rate of income tax of that name calculated
  in accordance with section 6B,”,

• ““Welsh higher rate” means the rate of income tax of that name calculated
  20in accordance with section 6B,”,

• ““Welsh taxpayer” has the same meaning as in Chapter 2 of Part 4A of the
  Government of Wales Act 2006”.

(11) In Schedule 4 (index of defined expressions), at the appropriate place, insert—

(12) In section 7 of the Taxes Management Act 1970 (notice of liability to income tax
and capital gains tax), in subsection (6), before “the dividend ordinary rate”
insert “the Welsh basic rate,”.

(13) The Taxation of Chargeable Gains Act 1992 is amended in accordance with
35subsections (14) and (15).

(14) In section 4 (rates of capital gains tax), in subsections (4) and (5), before “or the
dividend” insert “, the Welsh higher rate”.

(15) In section 4A (section 4: special cases), in subsection (5), before “or the
dividend” insert “, the Welsh higher rate”.

10 Welsh taxpayers for social security or child support purposes

After section 155 of GOWA 2006 insert—

“155A Welsh taxpayers for social security or child support purposes

(1) The Secretary of State may by order provide for individuals of any
5specified description to be treated as if they were, or were not, Welsh
taxpayers for all or specified purposes of—

(a) social security, or

(b) child support.

(2) The Secretary of State may by order provide in relation to any year of
10assessment that the Welsh basic rate, Welsh higher rate or Welsh
additional rate in relation to the income of Welsh taxpayers is to be
treated as being a specified rate for all or specified purposes of—

(a) social security, or

(b) child support.

(3) 15An order under subsection (1) or (2) may apply in respect of any
individuals whether or not they have a close connection with Wales.

(4) An order under subsection (1) or (2) may make such modifications of
any enactment, or any other instrument or document, as the Secretary
of State considers appropriate in connection with the provision made
20by the order.

(5) No order is to be made under subsection (1) unless a draft of the
statutory instrument containing it has been laid before, and approved
by a resolution of, each House of Parliament.

(6) No order under subsection (2) which contains a provision making
25modifications of an enactment contained in an Act is to be made unless
a draft of the statutory instrument containing it has been laid before,
and approved by a resolution of, each House of Parliament.

(7) A statutory instrument containing an order under subsection (2) is
(unless a draft of the statutory instrument has been approved by a
30resolution of each House of Parliament) subject to annulment in
pursuance of a resolution of either House of Parliament.

(8) In this section—

• “specified” means specified in the order;

• “Welsh basic rate”, “Welsh higher rate” and “Welsh additional
  35rate” have the same meaning as in the Income Tax Acts;

• “Welsh taxpayer” has the same meaning as in Chapter 2 of Part 4A
  of this Act.”

11 Amendments to the definition of a Scottish taxpayer

(1) Chapter 2 of Part 4A of the Scotland Act 1998 (Scottish rate of income tax) is
40amended as follows.

(2) Section 80D (Scottish taxpayers) is amended in accordance with subsections (3)
to (5).

(3) In subsection (1)—

(a) for “In” substitute “For”;

(b) in paragraph (a), after “purposes” insert “for that year (see Schedule 45
to the Finance Act 2013)”.

(4) In subsection (3)(a), for “any part of the UK other than Scotland” substitute
“England, Wales or Northern Ireland”.

(5) 5After subsection (4), insert—

“(4A) Subsection (1) does not apply if T is a Welsh parliamentarian for the
whole or any part of the year (see section 80DA).

(4B) For the purposes of subsection (4A) and section 80DA, T is a Welsh
parliamentarian if T is a member as described in any of paragraphs (a)
10to (c) of section 116E(4) of the Government of Wales Act 2006
(definition of a Welsh taxpayer).”

(6) After section 80D insert—

“80DA Scottish taxpayers: Welsh parliamentarians

(1) An individual (T) who is a Welsh parliamentarian for the whole or any
15part of a tax year is a Scottish taxpayer for that tax year if—

(a) T is resident in the UK for income tax purposes for that year (see
Schedule 45 to the Finance Act 2013),

(b) T meets condition C in section 80D for that year, and

(c) T meets either of the following conditions for that year.

(2) 20T meets the first condition if—

(a) the number of days in that year on which T is a member as
described in any of paragraphs (a) to (c) of section 80D(4),

exceeds

(b) the number of days in that year on which T is a Welsh
25parliamentarian.

(3) T meets the second condition if—

(a) the number of days in that year mentioned in paragraphs (a)
and (b) of subsection (2) are the same, and

(b) T meets condition A or B in section 80D for that year.”

(7) 30In section 80E (close connection with Scotland or another part of the UK), in
subsection (3)(c)—

(a) for “at least as much of the year as” substitute “more of the year than”;

(b) for “any one other part of the UK” substitute “each other part of the UK
(considered separately)”.

(8) 35In section 80F (days spent in Scotland or another part of the UK)—

(a) in subsection (1), for the words from “if)—” to the end substitute “if) the
number of days in the year on which T is in Scotland at the end of the
day exceeds each of the following—

“(a) the number of days in the year on which T is in England
40at the end of the day;

(b) the number of days in the year on which T is in Wales at
the end of the day;”

“the number of days in the year on which T is in Northern
Ireland at the end of the day.”;

(b) in subsection (2), for “But T is not to be treated as” substitute “T is
treated as not”.

Referendum on income tax provisions

12 Referendum about commencement of income tax provisions

(1) 5Her Majesty may by Order in Council cause a referendum to be held
throughout Wales about whether the income tax provisions should come into
force.

(2) If the majority of the voters in a referendum held by virtue of subsection (1)
vote in favour of the income tax provisions coming into force, those provisions
10are to come into force in accordance with section 14.

(3) But if they do not, that does not prevent the making of a subsequent Order
under subsection (1).

(4) No recommendation is to be made to Her Majesty to make an Order under
subsection (1) unless a draft of the statutory instrument containing the Order
15has been laid before, and approved by a resolution of, each House of
Parliament and the Assembly.

(5) But subsection (4) is not satisfied unless the resolution of the Assembly is
passed on a vote in which the number of Assembly members voting in favour
of it is not less than two-thirds of the total number of Assembly seats.

(6) 20A draft of a statutory instrument containing an Order under subsection (1) may
not be laid before either House of Parliament, or the Assembly, until the
Secretary of State has undertaken such consultation as the Secretary of State
considers appropriate.

(7) For further provision about a referendum held by virtue of subsection (1), see
25Schedule 1.

(8) In this section “the income tax provisions” means sections 8 and 9.

13 Proposal for referendum by Assembly

(1) This section applies if—

(a) the First Minister or a Welsh Minister appointed under section 48 of
30GOWA 2006 moves a resolution in the Assembly that, in the
Assembly’s opinion, a recommendation should be made to Her
Majesty to make an Order under section 12(1), and

(b) the Assembly passes the resolution on a vote in which the number of
Assembly members voting in favour of it is not less than two-thirds of
35the total number of Assembly seats.

(2) The First Minister must, as soon as practicable after the resolution is passed,
ensure that notice in writing of the resolution is given to the Secretary of State.

(3) Within the period of 180 days beginning immediately after the day on which
notice under subsection (2) is received by the Secretary of State—

(a) 40the Secretary of State or the Lord President of the Council must lay a
draft of a statutory instrument containing an Order under section 12(1)
before each House of Parliament, or

(b) the Secretary of State must give notice in writing to the First Minister of
the refusal to lay a draft under paragraph (a) and the reasons for that
refusal.

(4) As soon as practicable after the First Minister receives notice under subsection
5(3)(b)—

(a) the First Minister must lay a copy of the notice before the Assembly,
and

(b) the Assembly must ensure that the notice is published.

14 Commencement of the income tax provisions etc if majority in favour

(1) 10This section applies where the majority of the voters in a referendum held by
virtue of section 12(1) vote in favour of the income tax provisions coming into
force.

(2) The Treasury may bring sections 8 and 9 into force by order.

(3) An order under subsection (2)—

(a) 15must appoint, in relation to each provision inserted by section 8 or 9,
the day on which it comes into force;

(b) may provide that a provision inserted by section 8 or 9 has effect in
relation to—

(i) a tax year appointed by the order and subsequent tax years, or

(ii) 20a financial year so appointed and subsequent financial years.

(4) A tax year may be appointed under subsection (3)(b) in relation to a provision
inserted by section 8 or 9 only if the tax year begins on or after the day
appointed under subsection (3)(a) in relation to that provision.

(5) An order under subsection (2) that brings into force section 116D of GOWA
252006 (power to set Welsh rates for Welsh taxpayers) must appoint the first tax
year in relation to which a Welsh rate resolution may be made.

(6) The Secretary of State may bring section 10 into force by order.

(7) The Treasury may bring section 11(5), (6), (7)(a) and (8)(a) into force by order.

(8) An order under subsection (7)—

(a) 30must appoint a day on which the amendments made by the provisions
mentioned in that subsection come into force, and

(b) must provide that those amendments have effect in relation to a tax
year appointed by the order and subsequent tax years.

(9) The tax year appointed under subsection (8)(b)—

(a) 35must begin on or after the day appointed under subsection (8)(a), and

(b) must not precede the tax year appointed under subsection (5) or under
section 25(5) of the Scotland Act 2012 (the first tax year for which
Chapter 2 of Part 4A of the Scotland Act 1998 has effect).

(10) An order under this section may make different provision for different
40purposes.