The Welsh government will cap the increase to the business rates multiplier to 5 per cent for 2024-25, finance minister Rebecca Evans announced in her draft budget on Tuesday.
This is lower than the 6.7 per cent increase which would otherwise apply from the default inflation of the multiplier in line with Consumer Price Index.
Evans said this is being delivered at a recurring annual cost of £18 million from 2024-25 onwards and will benefit all ratepayers who do not already receive full relief. The provisional multiplier for 2024-25 will be 0.562.
“This is the maximum level of support affordable using all the consequential funding which came to Wales as a result of decisions announced in the UK government’s Autumn Statement,” Evans said, adding that almost half of ratepayers, including thousands of small businesses, will not be affected by an increase in the multiplier, thanks to the system of full reliefs.
Evans announced a £384m package of business rates support, which includes a fifth successive year of relief for retail, leisure and hospitality businesses.
The government will invest £78m to provide eligible businesses a 40 per cent rates relief for the duration of 2024-25. As in previous years, the relief will be capped at £110,000 per business.
“This temporary relief was never intended to continue indefinitely and our move to more frequent revaluations will ensure that Non-Domestic Rates bills better reflect up-to-date market conditions for all sectors of the tax-base,” Evans said.
The government will provide transitional relief for all businesses whose liability increased by more than £300 as a consequence of the April 2023 revaluation. Such increases in business rates liability as a result of revaluation are being phased in over two years.
The government is providing £113m over two years to fund this relief, supporting all areas of the tax base. The funding provided for transitional relief in 2024-25 is £37.6m.
While these measures will provide £134m of additional support for 2024-25, the permanent rates relief schemes are worth £250m to businesses and other ratepayers every year, taking the business rates support in the next fiscal to £384m.
In addition, Evans announced that a fund will be developed for impacted sectors to complement the wider business rates decisions.
“This support will provide eligible small to medium-sized businesses in the retail, leisure and hospitality sectors, with funding to be used during 2024-25 to invest in measures to future-proof their businesses,” she said.
The new £20m Future Proofing Fund will be introduced in early 2024-2025 for businesses. From 2024-25, the business rates system will also include new measures to support businesses investing in property improvements and renewable energy.