Businesses call on Welsh Government to use new powers to reform business rates

Multiple business organisations are calling for the Welsh Government to use its new powers to reform business rates.

The Local Government Finance (Wales) Act of 2024 means that, from April, the Welsh Government will be able to adjust how rates are calculated and to tailor any relief. The Senedd (above) is due to vote on the 2025/26 Welsh Government Budget on 4 March.

The Draft Budget includes a cap on the business rates multiplier increase, and the extension of 40% business rates relief for hospitality and leisure businesses. By the time it comes to consider the 2026/27 Budget, the Welsh government could go further still by using the powers to introduce variable multipliers to support small businesses and sectors.

Writing in Business News Wales last week, David Chapman, executive director of UKHospitality Cymru, said: “Reforming business rates using the new powers introduced last September is an essential step that must be taken boldly.

“Online businesses and out-of-town retail centres don’t shoulder a proportionate share of the burden. This disparity distorts the market and makes it harder for bricks-and-mortar businesses to compete and thrive. The current system has left too many businesses surviving on the back of relief schemes, rather than a sustainable, reformed rates structure.”

The Federation of Small Businesses has also previously called for change, alongside the Welsh Retail Consortium. By way of explanation, speaking in the Senedd on 18 February, Mark Drakeford, Cabinet Secretary for Finance and Welsh Language, said: “We can’t use a split multiplier this year, because the power to do so doesn’t become available until 1 April.

”At that point we will, of course, be considering whether that split multiplier possibility can be used to the advantage of businesses in Wales.”