Finance Secretary Mark Drakeford unveiled plans to cut business rates for around 13,000 smaller “bricks and mortar” shops while raising the amount payable for higher value properties.
The former First Minister launched a 12-week on proposals to adjust the multipliers for business rates, which are officially known as non-domestic rates.
In a written , Prof Drakeford said the Welsh Government intends to make use of new powers to bring in “differential multipliers” for the first time from April 2026.
He proposed introducing a lower multiplier – a key determinant of bills – for small- to medium-sized retail shops, kiosks and post offices, with a rateable value below £51,000.
“This proposal recognises the unique challenges faced by the ‘bricks and mortar’ retail sector, not least through their exposure to competition from online retailers,” he said.
“It would be intended to help rebalance the non-domestic rates system in favour of retail shops, to support the ongoing viability and sustainability of the sector.”
Prof Drakeford said the Welsh Government also plans to bring in a higher multiplier for the largest properties, with rateable values of more than £100,000.
He wrote: “This would help to offset the revenue … forgone through the proposed retail multiplier and ensure the standard multiplier (applicable to all properties which would not be subject to the retail or higher multiplier) could be set at the lowest possible level.”
Prof Drakeford added: “The first use of any new powers will highlight practical considerations which inevitably arise in implementing innovative policy action.
“This relatively modest proposal will allow these matters to be identified and resolved, laying the ground for further reform in the future."
Sara Jones, head of the Welsh Retail Consortium, said: “Welsh ministers have made headway on aspects of the business rates agenda in recent years, notably introducing more regular revaluations.
"However, the Welsh business rate is the highest in Britain and has risen to a 26-year high, at a time when retailers are being thwacked by a range of statutory costs. Whilst the consultation on proposals to reduce rates for the smallest shops sound like an encouraging step, a high proportion of retailers operate from medium-sized and larger premises.
"These are shops that help underpin the health and vitality of our town and city centres and high streets across Wales and account for a large share of retail jobs.
"The proposals as they stand suggest these stores could pay even more than they do at present, and more than their counterparts occupying equivalent stores in England.
"We need to ensure a commensurate rates reduction applies to medium-sized and larger stores too. It’s not in the interests of the Welsh economy for retailers to be incentivised to invest in Cheltenham over Cardiff.”
The levels of multipliers will be determined as part of the Welsh Government’s 2026/27 budget, which will be set at the end of 2025, taking the next rates revaluation into account.
According to the consultation, the increase in the higher multiplier would offset revenue lost through the retail multiplier – with no change in the overall amount raised.
Around 3,200 properties in Wales would pay rates based on the higher multiplier.
The higher multiplier would not apply to properties occupied by public sector bodies, such as hospitals, surgeries, schools, colleges, museums, universities, courts and police stations.
But the consultation document warned it would not be possible to exclude more generic property types, such as offices, occupied by public services.
A lower multiplier applies to properties in England with rateable values under £51,000, and further lower multipliers for retail, leisure and hospitality properties are on the horizon.
The Ƶ Government will also introduce a higher multiplier for properties with rateable values of £500,000 and above in 2026/27.
Scotland sets three differential multipliers and in Northern Ireland, a central rate is supplemented by a rate set by each district council.
David Chapman, Executive Director of ƵHospitality Cymru, said: “The Welsh Government claims it recognises the ‘unique challenges’ faced by bricks and mortar businesses, yet it has simply ignored and overlooked hospitality as one of the sectors most impacted long-term by the broken business rates system.
“These plans would see bills dramatically hiked, by the tens of thousands for many, and force businesses to reduce their hours, cut jobs and see many close for good – all of which would be a direct consequence of the Welsh Government’s actions.
“It will make Wales a significantly worse place to do business and see investment in hospitality diverted to the other side of the border to England.
“It is a fact that hospitality businesses pay three times more than their fair share in business rates – something that the Ƶ Government has recognised and is addressing in its own business rates reform.=
“I urge the Welsh Government to recognise the catastrophic damage these proposals would wreak and take them back to the drawing board for wholesale revision. Reduce rates across the hospitality sector and let us continue to rebuild, serve our communities, create jobs for local people and play a key role in fostering economic growth.”
