Business rates rise is a hurricane, say Welsh businesses

A rise in business rates in Wales has created a “perfect hurricane” for hospitality and retail businesses, an industry body has warned.

Since April, the Welsh Government’s business rates rebate for sectors has been reduced, with high street traders facing higher bills.

UK Hospitality Cymru said rising costs had left some businesses “on edge”.

The Welsh Government said it continues to offer business rates relief, with just one in five paying the full bill.

Traders in Bangor, Gwynedd, said rising costs were starting to take a toll.

“We have the longest high street in the whole of the UK and it is one of the emptiest high streets in the whole of the UK,” said designer and upholsterer Sophia Ingham.

Since last July, she has been running her Phia store in the Deiniol shopping center, but expects to have to close this summer in a move that would be “entirely due to rising tariffs”.

It will be the last business in Bangor to close its doors.

“Most of the stores are closed or boarded up,” Ingham said.

She called on the government to reduce rates completely “to help rejuvenate high streets rather than kill them”.

Commercial rates, sometimes known as non-domestic rates, are a tax based on the rateable value (RV) of the property in use.

So, for example, a commercial premises with a £15,000 RV will have its value multiplied by 0.562, meaning a bill of £8,430.

Fees are collected by local authorities and paid into a national Welsh Government fund.

The Welsh Government determines what discounts, or relief, certain businesses are entitled to.

In April, the relief amount fell from 75% to 40% for retail and hospitality companies. Similar companies in England continue to get 75% relief.

The Welsh Government said it is still offering the retail and hospitality sectors the equivalent of £78 million in business rates discounts.

But the body representing hotels, pubs and restaurants said the sector was under enormous financial pressure.

“It’s not just a perfect storm, it’s a perfect hurricane,” said David Chapman, chief executive of UK Hospitality Cymru.

“We had the mandatory closure with Covid, we had high levels of energy prices, high levels of inflation in food and drinks. We don’t have any cash reserves, we are paying off Covid loans.

“The only support we had was business rates relief, and that was cut from us,” he said.

Chapman urged the Welsh Government to restore relief to the previous level, which would match the discount offered in England.

Andria Thomas runs clothing store Dot in Llandeilo, Carmarthenshire, where she sells imported European fashion brands to customers in the rural market town.

She said the increase in business rates was “a bit unfair” when similar stores in England pay lower rates.

“We are having to pay more than [businesses] across the bridge in England we have to pay, where our running costs are probably very much the same,” she said.

Ms. Thomas also sells clothes online, but wants to stay in business.

“Every extra cost impacts the profit you can make. And obviously, as much as I would like to continue having physical stores and a storefront, online operating costs are increasingly cheaper.

“So having business rates at a reduced cost is a huge influence in helping locals stay local.”

The Welsh Government said it was doing “everything we can, with the resources and powers we have” to provide support to businesses.

“We have offered a series of permanent non-domestic rates reductions for businesses, worth £250 million a year and fully funded by the Welsh Government.

“This includes small business rates relief, which supports taxpayers of around 70,000 properties across Wales, more than two thirds of which pay nothing.

“We are providing additional support for non-domestic rates worth £134 million in 2024-25. This includes a fifth consecutive year of support for retail, leisure and hospitality businesses with their rates bills, at a cost of £78 million, building on almost £1 billion of support provided in rates relief to these sectors since 2020-21.

“Only one in five properties is responsible for the full bill this year.”