Thousands of smaller hospitality, leisure and visitor economy properties across Wales are set to receive a permanent 30% reduction in their business rates bills from April 2027, replacing temporary support with a longer-term settlement.
Pubs, restaurants, cafés, bars, hotels, gyms, cinemas and other eligible premises with a rateable value below £51,000 will be covered by the Welsh Government's planned changes.
The move could provide greater certainty for businesses which have had to factor changing rates relief schemes into their costs and investment decisions.
Food and drink hospitality businesses currently receive temporary relief of 15%, meaning the new system would increase the level of support as well as making it permanent.
The changes will cover food and drink venues including pubs, restaurants, cafés, bars, food courts, licensed clubs and live music venues, alongside visitor accommodation such as hotels, guest houses and hostels.
Leisure and cultural premises including cinemas, theatres, libraries, museums and gyms will also be eligible.
Retail properties will continue to benefit from support as part of the wider attempt to rebalance the business rates system towards high street businesses.
Rather than reducing the overall amount raised through non-domestic rates, the Welsh Government intends to fund the measure through a small increase in the higher multiplier applying to Wales' highest-value properties.
That effectively shifts some of the business rates burden away from smaller high street hospitality, leisure and retail premises towards properties with higher rateable values.
First Minister Rhun ap Iorwerth said:
“Our high streets are the heartbeat of communities right across Wales, and the businesses that fill them deserve our backing.
“This 30% cut to rates for pubs, cafés, gyms, hotels and so many other local favourites is about giving those businesses the confidence to invest, grow and keep serving the communities that rely on them.
“We're making the system work better for the sectors that bring our town centres to life.”
The reform forms part of the Welsh Government's commitment to rebalance business rates and will sit alongside the work of its Town Centres Taskforce, which is examining what additional support different town centres may require.
Cabinet Minister for Finance Elin Jones said:
“This significant and permanent change will make a real difference to eligible hospitality and leisure businesses right across Wales.
“We've taken a balanced approach, ensuring this support is affordable while protecting the vital contribution business rates make to our public services – targeting help where it will have the greatest impact on our high streets.”
David Chapman, Executive Director of UKHospitality Cymru, said:
“The Welsh Government has recognised that hospitality and leisure businesses are suffering under a huge tax burden and I’m pleased they have acted to reduce business rates bills for the majority.
“A lower multiplier for hospitality is a common-sense solution that we put forward in our manifesto and have campaigned for extensively. I’m pleased that Ministers in the Welsh Government have taken the time to engage with UKHospitality Cymru seriously on this and to act accordingly.
“However, I do have concerns that a significant number of hospitality venues will not be eligible for support. More than 500 venues, which are significant employers, will see their rates bills rise even further, when they are straining under the same financial pressures. That just doesn’t make sense.
“Given the Welsh Government’s clear and genuine intention to support hospitality, I hope it will now make the necessary changes to this policy to exempt hospitality businesses from the surcharge to ensure no venue will see their rates increase, at the very least.
“This business rates reduction must be a downpayment on a whole hospitality solution that goes even further at the Welsh Budget and I look forward to continue working with the Welsh Government to deliver growth, create jobs and support our communities.”
John Hurst, FSB Wales Chair, said:
“This support is a vital lifeline for small hospitality and leisure businesses and a welcome recognition of the intense financial pressure facing the sectors. These businesses are at the heart of our communities, providing essential places for people to meet, socialise and spend time together.
“The Federation of Small Businesses has long called for these measures, and today’s announcement is an important win for many business owners across Wales.
“We are also pleased that the Town Centres Taskforce will consider further steps to strengthen business confidence across every sector. That work should begin by increasing the small business rates relief threshold to ease pressure on more of the smallest firms.
“Small businesses are rooted in every community across Wales. Helping them survive and grow protects local jobs, strengthens local economies and builds lasting prosperity. Today’s announcement is an important step, and the priority now must be to build on it.”
Sara Jones, Head of the Welsh Retail Consortium, said:
“The business rates reduction for the smallest hospitality and leisure firms is encouraging and a positive move to support Welsh high streets.
“However, we would have liked to have seen a much more ambitious approach from Welsh Ministers with retailers of all sizes benefitting from a rates regime which is at least as competitive as that which applies in England. After all, small and larger businesses on our high streets mutually rely on each other to draw footfall to a destination, expand the choice and diversity on offer, and keep high streets vibrant. Together small and larger stores and businesses underpin the vitality and ecosystem of our town and city centres.
“Currently, medium-sized and larger stores in Wales pay a higher business rate than their counterparts in England. The forthcoming Budget provides the Finance Minister with an opportunity to address this disparity by reconsidering the higher multiplier applied to larger retail premises, in line with our call for retail to be removed from the surtax.”
The announcement does not yet establish the precise rates bills businesses will face in 2027-28.
Regulations are expected to be brought forward during the autumn and will require Senedd approval before the new arrangements can take effect on 1 April 2027.
The final values of the business rates multipliers for 2027-28 will be confirmed through the Welsh Government's budget process following the UK Government's Autumn Budget.
