The Welsh government has announced a 30% cut in business rates for some small to medium sized enterprises with a rateable value below £51,000. Those eligible are food and drink hospitality venues such as pubs, restaurants, cafés, bars, food courts, licensed clubs and live music venues. Also set to benefit are hotels, guest houses and hostels as well as leisure venues to include cinemas, theatres, libraries, museums and gyms. That is quite an extensive list.
Subject to the Senedd’s approval in the autumn of this year, the permanent reduction will be in place in April 2027 and will be funded by a slight increase in business rates for highest-value properties in Wales, thus enabling Welsh government to fulfil its manifesto commitment as it grapples with a demanding, tight budget.
In a press release from the Welsh government, First Minister Rhun ap Iorwerth said:
“Our high streets are the heartbeat of communities right across Wales, and the businesses that fill them deserve our backing.
“This 30% cut to rates for pubs, cafés, gyms, hotels and so many other local favourites is about giving those businesses the confidence to invest, grow and keep serving the communities that rely on them.
“We’re making the system work better for the sectors that bring our town centres to life.
“The change sits alongside the work of the Town Centres Taskforce, which will consider what more tailored support individual town centres need, recognising that different parts of Wales face different challenges.”
The Cabinet Minister for Finance, Elin Jones, said:
“This significant and permanent change will make a real difference to eligible hospitality and leisure businesses right across Wales.
“We've taken a balanced approach, ensuring this support is affordable while protecting the vital contribution business rates make to our public services – targeting help where it will have the greatest impact on our high streets.
“Regulations will be brought forward in the autumn and, subject to Senedd approval, will take effect from 1 April 2027.”
The Welsh government’s move to reduce rates by 30% and to include a wider variety of businesses goes far beyond what the Westminster government offered England last year, a 20% cut in rates offered to only pubs, social clubs and live music venues. Business rates are, of course, a devolved matter and the Welsh government’s move has been warmly welcomed. However, many feel that Westminster could go further in helping the hospitality industry.
Rachel Evans, Countryside Alliance Director for Wales, said:
“The UK government is responsible for Value Added Tax (VAT) and National Insurance (NI), and the recent increase in employers’ NI has hampered many small to medium sized businesses. Soaring energy costs and other tax pressures have brought about an industry-led campaign calling for VAT on hospitality to be halved from the current 20% to 10%.
“With just over a month to go to the Autumn Budget, the Prime Minister and his cabinet will no doubt come under further pressure from the hospitality sector and others.”