Claire Archibald says Welsh firms are being placed at a disadvantage, with full relief ending at half the rateable value permitted in England

A REFORM UK Senedd Member has called on the Welsh Government to review the level at which small businesses in Wales qualify for full business rates relief.

Claire Archibald, who represents Ceredigion Penfro, wants ministers to consider increasing the threshold for 100 per cent Small Business Rates Relief from a rateable value of £6,000 to a figure closer to the £12,000 threshold operating in England.

Under the Welsh system, eligible premises with a rateable value of up to £6,000 receive full relief and pay no business rates. Relief is then reduced gradually for properties valued between £6,001 and £12,000.

In England, an eligible business occupying a single property with a rateable value of £12,000 or less can receive full relief. Support is tapered for properties valued between £12,001 and £15,000.

Ms Archibald said the difference meant some small Welsh businesses faced bills at an earlier stage in their development than comparable firms across the border.

She raised the issue after meeting businesses and exhibitors at the Royal Welsh Show, where owners discussed the challenges facing rural enterprises.

Ms Archibald said: “The difference between the Small Business Rates Relief thresholds in Wales and England places many Welsh businesses at a clear disadvantage.

“For growing businesses, particularly in rural areas such as Pembrokeshire and Ceredigion, losing financial support at a crucial stage of development can have a significant impact on their ability to invest, expand and create new jobs.

“I have spoken to a number of local businesses at the Royal Welsh Show, and these are exactly the kinds of enterprises we should be supporting.

“They are innovative, ambitious and make a valuable contribution to our economy. We need to ensure that our business rates system encourages growth rather than creating additional barriers.”

Business rates policy is devolved, meaning the level and structure of Small Business Rates Relief in Wales are matters for the Welsh Government rather than the UK Government.

Welsh ministers have powers to make regulations governing how non-domestic rates and reliefs operate in Wales. Local authorities calculate bills, collect payments and administer the relief, while the Valuation Office Agency determines the rateable value of individual properties.

Ms Archibald said increasing the threshold could allow small businesses to retain more money for recruitment, equipment, increased production and the development of new products.

She said: “Every pound that remains within a local business is a pound that can be reinvested into our communities.

“Supporting small businesses means supporting local jobs, economic growth and the long-term sustainability of our towns and villages.

“As policymakers look at ways to strengthen local economies and create opportunities across Wales, there is a strong case for reviewing the current threshold.

“Small businesses are the backbone of our communities and deserve a rates system that recognises their value, rewards growth and helps them move from surviving to thriving.”

The Welsh Government has previously highlighted the cost of its business rates relief schemes, saying its permanent reliefs are worth around £250 million annually.

It also introduced a wider £116 million support package following the 2026 revaluation, including transitional protection for businesses facing significant increases in their bills and a lower multiplier for eligible small and medium-sized retail properties.

Increasing the Small Business Rates Relief threshold would therefore involve a financial decision for ministers. Business rates raised in Wales are pooled by the Welsh Government and redistributed to councils to help fund local services, meaning more generous relief would either reduce the amount collected or require the lost income to be replaced from elsewhere in the Welsh budget.

Ms Archibald is now urging ministers to examine whether the Welsh threshold should be brought more closely into line with England.

EXPLAINER: Who controls business rates in Wales?

Are business rates set by Westminster?

Not in Wales. Non-domestic rates, commonly known as business rates, are devolved.

The UK Government controls the business rates system in England, while the Welsh Government is responsible for policy in Wales. Business rates policy has been devolved since 1999, with full financial responsibility transferred to the Welsh Government in April 2015.

Could the Welsh Government increase the threshold?

Yes. Welsh ministers can change the rules governing Small Business Rates Relief in Wales through legislation approved under the Welsh system.

The permanent Welsh relief scheme is currently set out in the Non-Domestic Rating (Small Business Relief) (Wales) Order 2017, as subsequently amended.

What support do Welsh businesses receive now?

Eligible premises with a rateable value:

• of £6,000 or less receive 100 per cent relief;
• between £6,001 and £12,000 receive tapered relief;
• above £12,000 do not normally receive Small Business Rates Relief.

Eligibility is generally limited to two properties per business within each Welsh local authority area, although separate arrangements apply to some post offices and registered childcare premises.

How is England different?

In England, qualifying businesses occupying a single property can receive:

• 100 per cent relief where the rateable value is £12,000 or less;
• tapered relief between £12,001 and £15,000.

The schemes are not identical, so the comparison is not simply that Welsh businesses receive nothing above £6,000. Welsh relief continues above that level, but it begins to reduce much earlier than in England.

Who sends the bill?

Local councils administer business rates, send bills and apply the relevant relief.

The rateable value itself is assessed independently by the Valuation Office Agency, while the multiplier and national Welsh relief policies are determined by the Welsh Government.

What would increasing the threshold cost?

The exact cost would depend on the new threshold, the number of qualifying properties and whether the tapered part of the scheme was also changed.

Because business rates income is used to support council services across Wales, ministers would need to accept a reduction in revenue, find savings elsewhere or provide replacement funding.