Wales politics

Business rates 'fog of uncertainty' needs lifting, AMs say

Newport's Market Arcade Image copyright Jaggery/Geograph
Image caption Business rates have been blamed for empty high street shops in places such as Newport

Small firms face a "fog of uncertainty" over business rates, AMs have said, calling for a fairer, clearer scheme.

A system with temporary rebates sometimes going on for years is not transparent, according to a report by the assembly's economy committee.

Another question was whether small business rate relief was being claimed by large firms with multiple premises.

The Welsh Government said it was planning a permanent relief scheme for small firms, and longer-term reforms.

The committee took views from companies from around Wales, and held a one-day session in October, shortly after publication of the first revaluation of premises for business rates in seven years.

The new rateable values - based on what the premises would cost to rent - shifted the burden away from struggling high streets and poorer urban areas, prompting complaints from rural business owners.

The Welsh Government has the power to set the level of business rates in Wales, which raise around £1bn a year.

It announced a £10m fund to help around 7,000 small firms facing a rates hike as a result of the revaluations.

This is in addition to the existing £98m Small Business Rates Relief scheme, under which firms with a rateable value of less than £6,000 pay no rates, with reduced bills for those with values between £6,000 and £12,000.

'Over-complicated'

The committee found there was confusion among company owners as to what business rates were for and how they were calculated.

Chairman Russell George said new business owners in particular "often struggle to get to grips" with the system.

"Many of those we spoke to told us about the problems they had paying the rates when they were just trying to get their business off the ground, and how they thought the way rates are set is over-complicated.

"We believe the Welsh Government should lift the fog of uncertainty around business rates with a transparent and consistent approach which people can quickly grasp and plan for.

"We also would like to see a clear future for the system, whether that comes under a new Land Value Tax or otherwise, and a reform of an appeals process which is currently opaque and drawn out."

The Welsh Government said it welcomed the report.

"We are currently planning a permanent Small Business Rates Relief scheme for 2018 onwards as well as longer-term reforms for the system," a spokesman said.

"The feedback we've received from this report, as well as the wider business community, will be considered as part of this development work."

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