The Welsh Parliament has given its unanimous backing to a major financial support package designed to shield businesses from the full impact of sharp tax increases next year.
Unanimous Support for Phased Tax Increases
Senedd members voted without opposition to pass regulations for a new £116 million transitional relief scheme. This initiative is specifically targeted at companies and organisations facing significant hikes in their non-domestic rates bills following a revaluation of properties that takes effect in April 2026. The scheme will ensure that increases are introduced gradually over a two-year period, rather than hitting businesses with the full amount immediately.
Mark Drakeford, Wales’s Finance Secretary, outlined the financial commitment, stating the Welsh Government estimates the relief will support approximately 25,000 ratepayers. The total cost is projected to be £77 million in the 2026/27 financial year and a further £39 million in 2027/28. Under the plan, eligible businesses will receive relief covering 67% of their increase in the first year and 34% in the second year.
Building on Permanent Support
Prof Drakeford was keen to stress that this substantial transitional package is additional to the permanent business rates reliefs already in place, which he said are currently worth around £250 million per year. He told the Senedd that, as a result of both permanent and transitional support, ratepayers for two-thirds of all properties in Wales will either pay no bill at all or receive some level of financial assistance.
"In providing this transitional relief scheme, we are closely replicating the scheme of relief we provided following the 2023 revaluation," Drakeford explained. "We are supporting all areas of the tax base in a consistent and straightforward manner."
Cross-Party Support Amidst Concerns
The Conservative shadow finance secretary, Sam Rowlands, confirmed his party's support for the regulations, acknowledging they would "soften the immediate impact for thousands of Welsh businesses." He warned that failing to approve the scheme would leave many firms facing "steep increases with no protection at all," an outcome his party did not desire.
However, Rowlands and other opposition members voiced significant ongoing concerns. Rowlands highlighted particular anxiety within the hospitality and leisure sector, where some businesses are reportedly facing potential rate increases exceeding 100%. He advocated for a more radical long-term solution, suggesting business rates should be scrapped entirely for all small businesses in Wales.
Former Tory group leader Paul Davies echoed these concerns, noting that Welsh businesses already contend with some of the highest business rates in the UK. "Whilst I appreciate that a transitional relief scheme will help some businesses manage these changes, the reality is that for many businesses it’s not enough," Davies stated. He expressed a fear that some companies could be forced to close due to the cumulative burden.
The regulations were formally signed off by the Senedd on December 16, 2025. Prof Drakeford noted that, due to the need to wait for the UK Government's budget announcement to confirm funding availability, the Welsh Government had faced time constraints. Consequently, the regulations were not subject to a formal public consultation process before being laid before parliament.
