Pubs, hotels and gyms in Wales to get 30% business rates cut

By

Wales business correspondent

Taxes paid by pubs, hotels and cinemas in Wales will fall after the Welsh government announced a 30% cut in some business rates.

First Minister Rhun ap Iorwerth said hospitality, accommodation and leisure venues would receive the permanent cut in rates from April 2027.

"It is about helping businesses like this to thrive, so our communities can thrive," ap Iorwerth said on a visit to a pub in Cardiff.

The cut, which will be funded by an increase in the rates paid by businesses with the highest-value properties, was welcomed by UK Hospitality Cymru. But the trade body warned businesses still faced "massive amounts of taxation coming from all areas".

Business rates are collected by the Welsh government before being redistributed as direct funding to local authorities in Wales.

The government said the 30% cut would apply to small and medium-sized businesses with a rateable value below £51,000.

It will be funded by "a small increase" in the rates paid by the highest-value properties in Wales, that includes some hotels and firms with large sites such as supermarkets.

Ministers said this would ensure there was no reduction in the amount of funding for local authorities.

In July, Prime Minister Andy Burnham announced a 20% cut in business rates for pubs, social clubs and live music venues in England, also due to come into effect from April 2027.

Wales' first minister said the 30% cut delivered on his government's "promise to rebalance the way business rates work" in order to "bring more vibrancy into our high streets".

He said the change was about helping businesses "thrive", "so our communities can thrive, which is something I think people in all parts of Wales want to see".

"We've got to think, what can we do using the powers that we have? What are the most effective things that we can do with our toolkit in Welsh government?

"And this is something that we're able to do now, bringing this in from April next year, which is the earliest point realistically we can do this. This will make a difference."

The 30% rate cut will replace the current 15% temporary rate cut for hospitality businesses.

Finance Minister Elin Jones said this would be paid for by an increase in rates for the largest businesses to help nurture "thriving high streets" in Welsh communities.

Jones said it was right that the "burden will fall on the bigger businesses, not just in the hospitality sector" to pay higher rates, amounting to around 1p in every £1.

The minister's pint-pulling "could do with some work", according to Radyr Tap landlord Phil Newbould, though he said the rates cut would be "helpful" for the industry.

"I think there's more that can be done," Newbould added.

Across the two pubs he runs, Newbould said the cut was "not as huge as it sounds" and would amount to a saving of £3,000 a year.

He pointed to a UK-wide campaign to cut the rate of VAT paid by hospitality businesses, which is controlled by the UK government in Westminster, and which he said would cut costs significantly.

Cafe and wine bar, Kindred, has been open for five months in Cardiff city centre and owner Oliver Banks said it was "fantastic" to know that business rates would be cut.

"Hopefully it can mean that we have a little bit more wiggle room with what we do with our costs on food and drink, but it also means that it's a bit lighter on people, especially in the current climate of things," Banks said.

Hospitality was not a sector run by people with "oodles of money" and restaurant owners "aren't exactly running around in sports cars", he added.

Previous increases in costs, linked to inflation and the rise in the minimum wage, had seen prices inevitably rise for customers.

But Banks said "there's only so much you can do as a business owner, and you can't put that cost all on to the guests".

UK Hospitality Cymru director David Chapman said the costs facing the sector made running a business similar to "plate spinning when you're riding an exercise bike".

Chapman added: "You have massive amounts of taxation coming from all areas. We have a VAT problem besides business rates. We also have high inflation in the industry over the last few years. Energy costs have been high. Labour costs have gone up incredibly, really, with the National Insurance changes.

"And so it's been a very difficult job, a really difficult balancing act to keep going."

That being said, Chapman was keen to welcome the cut in business rates and said it was "the beginnings of a change which I hope will permanently enable our businesses to look at growth and to look at further employment, and to start to plan ahead".

The UK government, which is responsible for VAT and National Insurance, said the Chancellor prioritised support for the hospitality sector by cutting business rates by 20% for pubs, social clubs and live music venues in England during his first week in office.

A spokesperson said: "As business rates are devolved, the business rates cut also means extra funding for the Welsh government, which can choose how to allocate it.

"Our Great British Summer Savings also benefited businesses and families from across the country, including Wales.

"The scheme increased footfall for businesses in these sectors over the summer, getting more people through the door and boosting local economies".