The Welsh Government has seen a significant decrease in revenue from two taxes devolved to Wales, amounting to over £120 million less collected in cash. The Welsh Revenue Authority (WRA), responsible for tax collection in Wales, reported a net collection of £330.2m from the Land Transaction Tax (LTT) and Landfill Disposals Tax (LDT) in the financial year 2023-24, compared to £418.6m in the previous year.
Specifically, the LTT collection decreased from £372.1m to £269.8m, with £202m attributed to residential transactions and £67.2m from commercial property deals. The LDT collection also saw a decline from £42m to £29.7m. The cash remitted to the Welsh Government from these taxes was £298m, down from £422m the previous year.
The decrease in tax revenue was attributed to a downturn in LTT transactions, mainly due to a slowing housing market, and a reduction in waste disposal at landfill sites for LDT. Despite the challenges, the Welsh Revenue Authority highlighted that 99% of tax returns were filed on time, and 98% of transactions were accurate on the first attempt.
Moreover, during the year, the WRA increased payments to consultants, primarily for work related to the potential introduction of a tourism tax in Wales. The Chief Executive of the WRA, Dyfed Alsop, emphasised the importance of developing new services, such as a visitor levy, to support local authorities and accommodation providers.
As the Welsh Government has the power to adjust income tax bands but has chosen to align with the UK Government, the reliance on revenue from devolved taxes becomes crucial. The WRA’s commitment to efficient tax management and timely interventions to correct inaccuracies is essential for maintaining revenue streams.
Looking ahead, the Welsh Revenue Authority aims to continue supporting taxpayers in filing correct returns and exploring new avenues for revenue generation. Despite the challenges posed by the decrease in tax collections, the focus remains on efficient tax administration and effective financial management to safeguard public funds and support essential services in Wales.