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THE CHALLENGE - REDUCING BUSINESS RATES

“No small business with a rateable value of less than £12,000 will pay business rates in Wales”. 

The Challenge

Welsh Conservatives have been at the forefront in championing business rate reform for small firms in Wales and WAG must ensure that our local businesses are not financially disadvantaged relative to those in England and Scotland.

The Evidence

During the last twelve years, the Welsh Assembly Government has failed to ensure that small businesses in Wales get the same level of business rate relief as those in England and Scotland. Following the Labour budget in Spring 2010, eligible ratepayers in England and Wales receive temporary small business rate relief at 100 per cent on properties up to £6,000 (rather than 50 per cent), and a tapering relief from 100 per cent to 0 per cent for properties up to £12,000 in rateable value for that period. This has been confirmed in the Coalition Government’s Emergency budget and will be available for a limited period between 1 October 2010 and 30 September 2011. However, this is planned for only one year and still puts Welsh businesses at a disadvantage as compared to their Scottish equivalents. Therefore, the Commission believes that a fairer system must be put into place once this relief has ended.

The Way Forward

There is a need to support small local businesses by enabling them to keep more of their income to develop their business. However, it has been estimated by the WAG that any move to bring in additional rate relief of the sort enjoyed by businesses in Scotland would take £40m out of WAG’s budget. The refusal of Ministers to implement a more favourable rate relief scheme for Wales suggests that their decisions are driven not by a lack of funding but by political ideology – even the new improved relief was as a result of UK policy decisions rather than any undertaken by the Welsh Assembly Government. We therefore propose that part of the economic development department's budget should be used to directly support rate reductions for the vast majority of small firms in Wales. This will ensure that no small business having a rateable value of less than £12,000 will pay business rates in Wales. 

Case Study

business rates in Wales, England and Scotland


If we compare the levels of business rate relief across England and Scotland and Wales prior to the temporary increase in rate relief for one year introduced by WAG in 2010, there are considerable differences in levels of business rate relief across the three nations. To qualify for 50 per cent business rate relief in England, the rateable value of a business should be £6,000 or below. In Scotland, any business with a rateable value of £8000 or less pays no rates at all. 


In Wales, a business would only qualify for 50 per cent relief if it had a rateable value of £2,400 and therefore a business with a rateable value of £6000 would only get 25 per cent relief.  Simply put, a small business in England with a rateable value of £6,000 would, after small business relief was applied, pay roughly £1221 in business rates in 2010-2011. In Wales, that business would currently pay £1840, a bill that is 50 per cent higher than in England. The same small business in Scotland would pay nothing. 

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