Retailers in Wales will benefit from a 40% business rates discount for the sixth successive year, in a new pledge by the Welsh government in the 2025/26 Budget.

Ministers came together on 10 December to allocate spending in the £26bn Budget. It includes £1.5bn of extra funding for public services.  

The government said it will invest an additional £78m to provide another year of support for retail, leisure and hospitality businesses with their non-domestic rates (NDR) bills, also known as business rates.

This builds on the £1bn of support provided through the rates relief schemes since 2020-21.

As in previous years, the relief will be capped at £110,000 per business across Wales.

The government also revealed it is providing a package of additional NDR support – targeted relief for retail, hospitality and leisure businesses and funding to cap the multiplier at 1%, which will benefit all ratepayers – worth £85m next year.

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This is on top of ‘permanent reliefs, which are worth £250m a year and aligns with ‘ambitions to prioritise growth’, the government said. This is set to benefit every ratepayer.

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Sara Jones, head of the Welsh Retail Consortium, said the cap of 1% is “welcomed” as it is a “huge burden”, but added it is not high enough.

“Whilst the increase is below inflation it will, however, continue to place a significant burden on the retail industry and requires a fundamental overhaul,” she continued. “ The multiplier is at a 25-year high and remains higher in Wales than in England and Scotland, acting as a significant barrier to investment, jobs and growth.” 

“Retailers have already been clobbered by the UK government’s colossal increase in employer national insurance contributions, disproportionately impacting the industry which has seen sales flatline for much of the year.  We will be seeking opportunities to engage in targeted interventions when it comes to business rates over the course of 2025, helping to ensure we have thriving shops of all sizes and successful high streets ensuring breadth of choice, convenience and experience for customers.”

The Welsh government also revealed that there would be no income tax rise, and this will be kept the same as England.

Jones said: “The finance secretary has heeded our warnings and ruled out an increase in the Welsh rate of income tax in the coming year. Any such uplift would have left pay packets lighter and dented shopper spending, impacting retailers who are already facing subdued consumer confidence, little to no growth in retail sales and nosediving footfall.”

Meanwhile, the Federation of Small Businesses (FSB Wales) welcomed the new budget. FSB Wales’ Policy Chair Ben Francis suggested the true test of the budget’s success would be if it ended Wales’ “prolonged period of economic stagnation”.

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