Business Rates in Wales

Business Rates in Wales are now a fully devolved responsibility of Welsh Assembly Government. As part of the 2017 Rating Revaluation, all non-domestic properties in Wales will get new rating assessments to come into force on 1 April 2017. The small business rate relief scheme in Wales applies rate relief at different rates up to different levels of rateable value. Because of this, as well as altering the liability of rates, the revaluation could also alter a business’s entitlement to small business rate relief, by virtue of a change in rateable value from one rating list to the next.

Recognising that the revaluation could move a business from a position where it enjoys 100% small business rate relief to one where it is not entitled to any small business rate relief, Welsh Assembly Government has published a proposed scheme of transitional rate relief designed to help businesses in this position and a consultation paper seeking views on its proposals. The proposed scheme of transitional adjustments will apply to businesses moving from 100% small rate relief to no small business rate relief; from 100% small business rate relief to only partial small business rate relief; and from partial small business rate relief to no small business rate relief. For businesses in this position the scheme calculates the additional liability resulting from the complete or partial loss of small business rate relief and applies 75% relief to the increase in year one, 50% in year two and 25% in year three. The full new level of liability will be phased in by year four.

This scheme of transitional adjustments is much more limited in its application than the scheme proposed in England, about which we have reported elsewhere in these news pages. Also unlike the scheme in England, the Welsh scheme is government funded rather than being funded by an additional levy on those who gain from the revaluation, as is the case with the English scheme. The scheme is much more limited, and targeted, than that in England but is also much simpler, and fairer in the sense that it does not penalise those who benefit from the effect of the revaluation. The consultation closes on 4 November 2016 and the Welsh Assembly Government proposes to publish final regulations to come into force by 1 January 2017.

As often seems to have been the case in respect of business rates matters, Welsh Assembly Government has adopted a rather clearer and simpler approach than that put forward in England. The consultation make no bones about the intention to support smaller businesses, rather than larger ones, and the scheme proposed is simplicity itself in comparison to that in England. Larger businesses will be concerned that increases which may affect them will not be phased in, but the consultation seems to make clear the Welsh Assembly Government has no intention of introducing a scheme to do this. There was no scheme of transition in Wales at the time of the last revaluation in 2010 and it seems clear that the Government there wishes to avoid that complication in so far as it possibly can.