Businesses leaders call for more protection from rates rises for hospitality and leisure sectors

The Federation of Small Businesses (FSB) Wales has urged the Welsh Government to shield hospitality and leisure firms from steep business rates increases set out in the 2026-27 Budget.

In a letter to Finance Secretary Mark Drakeford MS, the organisation warned that many small businesses are already under intense pressure and face disproportionate hikes compared with retailers.

FSB Wales said its latest Small Business Index figures paint a bleak picture of business confidence, which stands at minus 58 points.

The survey found that, for the first time, the proportion of small firms expecting to downsize, close or sell (30%) in the next 12 months exceeds those planning to grow (18%).

The domestic economy was cited as the leading concern for 68% of businesses, followed by the tax burden at 45%.

While welcoming the Welsh Government’s decision to introduce a new retail multiplier aimed at easing pressures on shops, FSB Wales expressed concern that hospitality and leisure properties have been excluded.

According to FSB analysis, a typical small retailer could face an 18% rise in business rates, while a hospitality or leisure business with the same rateable value may see a 40% increase by the end of the transitional relief period.

For medium-sized properties in those sectors, bills could rise by as much as 70% once transitional support ends, the organisation warned.

‘Wafer thin margins’

Joshua Miles, Head of FSB Wales, said hospitality and leisure businesses were central to local economies and high streets.

“Hospitality and leisure businesses are the lifeblood of our towns and city centres right across Wales, yet they are being hit with far steeper rates increases than retail,” he said.

“Many are already operating on wafer thin margins and these rises risk closures, job losses and empty properties in town and city centres across Wales.”

Mr Miles added: “We call on the Welsh Government to include hospitality and leisure in the new retail multiplier to support these vital sectors and to raise the Small Business Rate Relief threshold to £12,000, to match England.”

FSB Wales also warned that around 6,500 properties will be brought into the business rates system for the first time because the SBRR threshold has been frozen, increasing costs for smaller operators.

The group said the recent announcement of 15% relief for pubs, music venues and restaurants, alongside transitional relief, would slow the pace of increases in the coming financial year. However, it cautioned that many firms would still face “significant rises” by the end of the three-year transition period.

FSB Wales urged the Finance Secretary to “act quickly” to prevent further economic damage and protect businesses that contribute to employment, tourism and community life.

Support

The Welsh Government defended its non-domestic rates policy, pointing to a package of transitional support and relief measures.

A spokesperson said: “Our non-domestic rates arrangements for 2026-27 include £116m in transitional relief over the next two years and a new system of multipliers which are substantially lower for all ratepayers than the current single multiplier.”

Officials said the government has provided sustained support for affected sectors in recent years.

“Since 2020-21, we have allocated more than £1bn to provide six successive years of temporary relief for the retail, leisure and hospitality sectors.”

The spokesperson added that additional targeted support had recently been introduced.

“We also recently committed £8m to provide additional rates relief for food and drink hospitality properties, reducing bills for around 4,400 hospitality businesses.

“Our permanent relief schemes, which are currently worth £250m annually, are continuing. As a result of this support, almost half of all ratepayers benefit from full rates relief and pay no business rates at all.”