Business rate cuts could create 'vibrant high streets'

The Welsh government is considering cutting business rates for smaller retail shops to help them compete with online retailers and to create "more vibrant high streets".

A consultation has been announced on cutting rates for retail shops paying less than £51,000 in business rates, which it estimated will affect about 13,000 properties.

Business rates are a tax on non-domestic properties including shops, pubs and offices.

The Welsh Retail Consortium described the proposals as a "mixed bag" for retailers.

According to the proposals, larger properties with "rateable values" – an estimation of how much it would cost to rent a property for a year – over £100,000 could be charged slightly more, while public buildings such as hospitals and schools would be protected.

If approved, the changes would start on 1 April 2026, with the exact rates set during the Welsh government's budget planning for 2026-27.

Finance Secretary Mark Drakeford said the proposals would "re-balance the rates system in favour of retail shops" and are aimed at supporting the sector, particularly in the face of online competition.

He added the plans were part of efforts to "create more vibrant high streets" across Wales.

Vacant shops are an issue in many towns across the country, and research published in 2023 found one in six shops in Wales were empty.

Business rates are collected by local councils and sent to the Welsh government, which uses them to distribute funds back to local authorities.

Information on rents is gathered and analysed by the Valuation Office Agency (VOA), which works out a price for the rates per square metre of the premises.

Sara Jones, head of the Welsh Retail Consortium, described the proposals as "a mixed bag" for Welsh shops.

She said the business rate in Wales was at a "26-year high" and the highest in Great Britain, describing the move to reduce rates for small shops as "encouraging".

However, she urged ministers not to place a higher levy on medium-sized and larger shops.

"A higher business rate on these stores is the very antithesis of what's needed to spur retailers' investment in our town and city centres," she said.

David Chapman, executive director of UKHospitality Cymru, said the proposals "simply ignored and overlooked hospitality as one of the sectors most impacted long-term by the broken business rates system".

"These plans would see bills dramatically hiked, by the tens of thousands for many, and force businesses to reduce their hours, cut jobs and see many close for good," he said.

"It will make Wales a significantly worse place to do business and see investment in hospitality diverted to the other side of the border to England."

Mr Chapman called for "wholesale revision" of the plans to ensure hospitality venues are eligible for a lower rate.

Last year, business owners in Aberystwyth, Ceredigion, called for business rates to be re-evaluated, with one saying she paid more per square metre than those paid by major chains such as Marks & Spencer. Others said lower business rates could help occupy empty shop units.

Plaid Cymru said the proposals did not go far enough, urging the Welsh government to include small hospitality companies in the lower rate, while the Liberal Democrats said the proposed changes did not "address the scale of the problem", calling it an "outdated business rates system".

The consultation runs until 12 August.