New rules and the Welsh Budget

On 20th December, the Welsh Government published its Draft Budget for 2022 to 2023.

The draft Budget provides detail on the Welsh Government’s financing, taxation and (Main Expenditure Groups) MEG level allocations. 

In addition, both employers and employees need to be aware of new rules which allow the Welsh Government to fine people for not working from home, when they are able to do so.

Please find below our summary of the main points you should be aware of:

Draft Welsh Budget published

The draft Budget confirms no changes are proposed to Welsh income tax rates, or Land Transaction Tax (LTT) rates and bands. 

• The Welsh Rates of Income Tax (WRIT) stays the same for 2022-23
• No changes to the LTT
• The Welsh Government will open a consultation relating to the local variation of LTT rates for purchases of second homes and holiday lets

The WRIT process for Wales involves the UK Government reducing each of the three income tax rates for Welsh taxpayers by 10p. The Welsh Government then decides whether to set the Welsh rates at 10p, thereby retaining parity between Welsh and English taxpayers. Alternatively, the Welsh Government can set different rates. 

The Welsh Government had previously committed not to take more in income tax from Welsh families for as long as the economic impact of COVID 19 lasts. Accordingly, the Welsh draft Budget proposes to set WRIT for 2022 to 2023 at 10p.

Fines where individuals go to work when they could work from home

From 20 December, new rules apply in Wales which mean people must work from home where it is reasonably practicable for them to do so. These new rules impact both employers and employees.

Employers

• Employers must allow or require their employees to work from home unless there is a clear business need that would make working from home impractical, in line with their duties to take reasonable measures
• The Welsh Government has clarified “reasonable measures” as an expectation that employers must be flexible and make adjustments wherever that is possible. For example issuing staff with IT equipment (laptops, monitors, keyboards), office furniture, mobile phones and facilitating communication across locations
• The new rules come with teeth and potentially, an employer could be fined up to £10,000 for repeated failures to allow employees to work from home
• Fines will generally start at a lower level of £1,000 for first offences
• Employers should also be mindful that there is already a legal requirement to carry out a risk assessment and to take reasonable measures to minimise the risk of exposure to and spread of coronavirus

Employees

• An individual could be fined £60 if they go to work when they could work from home without a ‘good reason’

These new fines will cause anxiety for both employers and employees, grappling to deal with challenging economic conditions and complicated legal obligations.

Where help is needed

Employers and employees are likely to struggle to fully understand and implement some aspects of the new rule. 

Where this is the case, businesses may need to take specialist legal advice as these situations are fact specific and each case is likely to be different.

Date published 22 Dec 2021 | Last updated 22 Dec 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.