Workers in Wales have been accidentally charged Scottish rates of income tax, after a mix-up involving tax codes.

Welsh rates of income tax were introduced on 6 April 2019, requiring employers in Wales to use a ‘C' tax code to apply the rates.

However, HMRC reported that some employers used an ‘S' code, which applies to Scotland, resulting in taxpayers being charged incorrectly.

While three income tax bands work top of the personal allowance in Wales, the same as those in Westminster, Scotland has five bands and two different tax rates.

Llyr Gruffydd, chair of the Welsh National Assembly's Finance Committee, said:

"We raised concerns about the flagging process for identifying Welsh taxpayers during our inquiries into fiscal devolution and the Welsh Government's draft budget.

"On each occasion we were told the matter was in hand and the lessons from the devolution of income tax powers to Scotland had been learned."

Jim Harra, deputy chief executive and second permanent secretary at HMRC, said he was confident the correct tax codes had been sent to employers.

He said HMRC had "engaged extensively with employers and payroll software providers" ahead of the new rates, and had ensured they had "all the information they needed".

Harra added that any errors in tax codes will be corrected in-year or at the end of year reconciliation.

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