Senedd approves £116m transitional relief for business rates

Chris Haines, ICNN Senedd reporter

Businesses facing sharp hikes in tax bills after the 2026 revaluation will see increases phased in over two years after the Senedd backed a new transitional relief scheme.

Senedd members unanimously approved regulations to help businesses which face significant rises in non-domestic rates bills after a revaluation taking effect in April 2026.

The Welsh Government estimates the transitional relief will support 25,000 ratepayers at a cost of £77m in 2026/27 and £39m in 2027/28. The partial relief covers 67% of the increase in the first year and 34% in the second.

Mark Drakeford, Wales’ finance secretary, stressed the £116m scheme comes on top of permanent rate reliefs which are currently worth £250m a year. He said ratepayers for two-thirds of properties will pay no bill at all or receive some level of relief.

The former first minister told the Senedd: “In providing this transitional relief scheme, we are closely replicating the scheme of relief we provided following the 2023 revaluation – supporting all areas of the tax base in a consistent and straightforward manner.”

The Conservatives’ Sam Rowlands expressed his party’s support for the transitional relief scheme which will help ratepayers facing sharp increases after the 2026 revaluation.

He said: “We are grateful that the Welsh Government has at least brought forward a scheme that will soften the immediate impact for thousands of Welsh businesses.

“We also understand that if these regulations are not approved or supported… this relief scheme will not be in existence. Many businesses across Wales would face steep increases with no protection at all and that is certainly not an outcome we would want.”

But the shadow finance secretary warned businesses up and down Wales are worried about the increase in rates that they are liable to pay.

Advocating scrapping rates for all small businesses in Wales, Mr Rowlands said: “We’ve heard first-hand from many of those in the hospitality and leisure sector, some of whom are facing increases of over 100% in the tax rates they are expected to pay.”

‘It’s not enough’

Responding as the Senedd signed off on the scheme on December 16, Prof Drakeford said the Welsh Government had to wait for the UK budget to know if funding was available. As a result of the time constraints, the regulations were not subject to formal consultation.

Prof Drakeford agreed with Mr Rowlands that voting against the regulations would not improve support, only eliminate the transitional relief package before the Senedd.

Earlier in Tuesday’s Senedd proceedings, former Tory group leader Paul Davies warned Welsh businesses have already been hit with some of the highest business rates in the UK.

He said: “The latest business rates revaluation has meant that some businesses are now facing rises of several hundred per cent compared with previous assessments…

“Whilst I appreciate that a transitional relief scheme will help some businesses manage these changes, the reality is that for many businesses it’s not enough and some businesses will be forced into a position where they will have to close.”