Non-domestic rates differential multipliers: integrated impact assessment 1 April 2027

The proposal amends the scope of non-domestic rates multipliers. Non-domestic rates is a local property tax levied on the occupiers of non-domestic property which contributes over £1.1bn annually towards the funding of essential public services provided by local government in Wales. Liability, prior to the application of any reliefs, is calculated by taking the rateable value of the property, as determined by the independent HMRC Valuation Office, and multiplying it by the multiplier, which is set annually by the Welsh Government. 

An expanded lower multiplier will provide a permanent 30% reduction in liabilities for selected hospitality and leisure businesses, bringing them in line with small to medium sized retail shops. This additional support will be funded by a modest increase in the higher multiplier applicable to the largest (by value) properties in the tax-base.

1. How have the five ways of working shaped the development and implementation of this policy or legislation?

The proposal responds to a Programme for Government commitment to rebalance the non-domestic rates system, linked with the broader ambitions of the Welsh Government to promote town centre regeneration. It follows consultation with ratepayers and other stakeholders by the previous Welsh Government and further engagement with businesses and their representatives. The policy approach is intended to provide long-term certainty for relevant businesses, by providing permanent support through a structural change to the non-domestic rates system. Rebalancing the system to better support the businesses on which vibrant town centres depend is intended to help prevent the continuation of trends which may otherwise undermine their sustainability in some places. Development and implementation of the policy approach has been undertaken in collaboration with delivery partners responsible for administration of the non-domestic rates system, including the HMRC Valuation Office and local authorities. This builds on established and integrated mechanisms for administering differential multipliers.

2. Who have you collaborated with and involved when developing the proposal, and to understand its impacts, including on people, households, public bodies, businesses and the third sector (e.g. through engagement with relevant stakeholders or public consultation?)

An open public consultation on proposals to introduce the retail and higher multipliers was undertaken by the previous Welsh Government in 2025. 172 responses were received from a range of stakeholders, including businesses, local authorities, sector representatives, professional bodies rating agents and academics. A majority of respondents supported the proposals, with a particularly high level of support for the retail multiplier. The primary view of respondents who did not support the consultation proposals, as well as some which provided conditional support, was that the focus should be broadened beyond retail. Respondents with this view argued that other sectors, particularly hospitality and leisure, should benefit from a lower multiplier. Some stakeholders were concerned about the application and level of the higher multiplier. The findings of this consultation are, therefore, relevant to the development of these policy changes, implementation and assessing the impacts.

3. How does the policy contribute to sustainable development and long-term well-being outcomes?

The proposal responds to a Programme for Government commitment to rebalance the non-domestic rates system, linked with the broader ambitions of the Welsh Government to promote town centre regeneration. The policy approach is intended to provide long-term certainty for relevant businesses, by providing permanent support through a structural change to the non-domestic rates system. Rebalancing the system to better support the businesses on which vibrant town centres depend is intended to help prevent the continuation of trends which may otherwise undermine their sustainability in some places. The policy approach is being delivered in a revenue neutral manner, preventing an erosion of non-domestic rates revenue to support local public services for current and future generations (if the change was funded by the Welsh Government this would represent a recurrent annual cost). 

4. What are the key impacts (positive, negative, and opportunities) across each of the seven well-being goals?

The primary positive impact of the policy will be reduced non-domestic rates liabilities for selected small to medium sized retail, food and drink hospitality, visitor accommodation and leisure properties, in line with the intention to rebalance the non-domestic rates system. This is likely to result in significant savings for eligible ratepayers, which may help reduce pressures from financial overheads, meet other costs and enable investment in their business, supporting the ongoing viability and sustainability of high streets and town centres.

The primary negative impact of the policy will be non-domestic rates liabilities which are marginally higher than they otherwise would be for properties subject to the higher multiplier. A marginal supplement on the higher multiplier would be sufficient to support the lower multiplier. The design of the higher multiplier has taken account of the composition of the relevant part of the tax-base. Exclusions from the application of a higher multiplier ensure that, as far as possible, it does not apply to properties occupied by public sector bodies or other institutions which are largely sustained by public funding models. This is intended to mitigate any negative impact on non-domestic rates liabilities for those ratepayers.

These impacts on non-domestic rates liabilities will be proportionate to the rateable values of individual properties. The Welsh Government recognises that there is a balance to strike between the breadth of support provided through the lower multiplier and the resulting impact on the value of the higher multiplier.

There may also be indirect impacts on employment within the retail, food and drink hospitality, visitor accommodation and leisure sectors, if reduced costs result in increased staffing. This may be particularly beneficial for younger people, females, and people who are single or never married, due to their representation within the workforce. 

The policy intention and anticipated impacts will support some of the well-being goals for Wales set out in the Well-being of Future Generations (Wales) Act 2015. In particular, supporting businesses and other organisations, which are integral to vibrant and sustainable high street and town centre economies, will contribute to the well-being goal of a more prosperous Wales. Supporting certain beneficiaries in the leisure sector, such as museums, cinemas and theatres, has the potential to contribute to the well-being goal of a Wales of vibrant culture and thriving Welsh language.

The policy is also expected to provide indirect positive impacts for some disadvantaged areas and people, including those affected by digital exclusion, who are particularly reliant on access to local businesses. Although digital exclusion has improved (reduced) in recent years, with only 4% of the population in Wales not using the internet, certain groups (older people, disabled people, people with long-term health conditions, people with lower educational attainment and socio-economic advantage, rural communities and people who do not use English as their first language) are more likely to be excluded. The potential indirect benefits for disadvantaged areas and people, through sustained access to local businesses, will contribute to the well-being goals of a more equal Wales and a Wales of cohesive communities.

5. What evidence, including reports under the Act, has informed the policy, and how will it support ongoing decision-making?

As non-domestic rates multipliers affect the costs faced by owners and occupiers of non-domestic property, the primary evidence sources to inform the policy and anticipated direct impacts are local authority billing data and HMRC Valuation Office property data. Evidence relating to potential indirect impacts of the policy includes statistics on employment and digital exclusion.

The 2021 Census provided data on employment based on various characteristics and by sector. A larger proportion of those employed in the relevant sectors are younger (aged 16-24), female, or single or never married.

The National Survey for Wales considers internet usage and digital exclusion. This confirms that certain groups (older people, disabled people, people with long-term health conditions, people with lower educational attainment and socio-economic advantage, rural communities and people who do not use English as their first language) are more likely not to have access to the internet.

The anticipated impacts of the policy have the potential to contribute positively to a range of national well-being indicators, including those related to employment, satisfaction with local areas, and participation in arts cultural or heritage activities. It is, however, recognised that there is a much broader range of economic and social factors influencing all relevant goals and indicators, the respective impacts of which will not be possible to isolate from this policy.

Data on non-domestic rates will continue to be received from local authorities and the HMRC Valuation Office on an annual basis. This will enable the Welsh Government to monitor the number of properties subject to either the lower multiplier or the higher multiplier, as well as their contribution to overall non-domestic rates revenue. This information will be used to inform the maintenance of differential multipliers, as part of the annual setting of all multipliers. The wider impacts of this policy will be highly context dependent and not possible to isolate from other economic factors.

Mandatory publication 

Equality Impact Assessment

Completed: Yes

Children’s Rights Impact Assessment

Completed: Screening only required for this proposal

Health Impact Assessment

Completed: Yes

Published: Not required for this proposal

Other Impact Assessments

Welsh Language Impact Assessment

Completed: Yes

Data Protection Impact Assessment Screening

Completed: Yes

Biodiversity Impact Assessment

Completed: Not required for this proposal

Rural Proofing Impact Assessment

Completed: Not required for this proposal

Sustainable Land Management Impact Assessment

Completed: Not required for this proposal

Carbon Impact Assessment

Completed: Not required for this proposal

Duty of Quality (Health) Impact Assessment

Completed: Not required for this proposal

Socio-economic Impact Assessment

Completed: Yes

Equality Impact Assessment

Name of decision:

Non-domestic rates differential multipliers 

Purpose / aim of decision:

The proposal aims to rebalance the non-domestic rates system to support businesses that play an important role in vibrant high street and town centre economies. 

Rationale for not conducting a HIA:

The proposal relates to the treatment of non-domestic properties for non-domestic rates purposes. The impacts are in relation to the amount of non-domestic rates businesses and other ratepayers are liable to pay and are mainly of an economic nature, but do not affect the health sector (e.g. hospitals). There are no direct impacts in relation to health as a result of the proposal.