Proposals for non-domestic rates differential multipliers: summary of responses

Through this consultation, the Welsh Government sought views on proposals to introduce differential multipliers for non-domestic rates in Wales. 

The Welsh Government is delivering a range of reforms to the non-domestic rates system during the current Senedd term. The multiplier is a key determinant of the non-domestic rates bills that ratepayers are required to pay. Non-domestic rates liability, prior to the application of any reliefs, is calculated by taking the rateable value of the property, as determined by the independent Valuation Office Agency, and multiplying it by the multiplier, which is set annually by the Welsh Government. In Wales, a single multiplier currently applies to all properties in the tax-base. 

The Local Government Finance (Wales) Act 2024 provides the Welsh Government with the ability to introduce differential multipliers for Wales using regulations. The consultation sought views on the Welsh Government’s proposals to introduce differential multipliers from 1 April 2026.

The Welsh Government proposes to introduce a lower multiplier for small to medium sized retailers. This proposal recognised the unique challenges faced by ‘bricks and mortar’ retail shops, not least through their exposure to competition from online retailers. The proposed retail multiplier would apply to properties with rateable values below £51,000 and specified descriptions in a local rating list which are applied to retail shops. 

The Welsh Government is also considering introducing a higher multiplier for high value properties, to offset the revenue which would be forgone through the proposed lower (retail) multiplier. It is proposed that a higher multiplier would apply to properties with a rateable value above £100,000, subject to exclusions for specific property types which are occupied by public sector bodies or other institutions which are largely sustained by public funding models.

The consultation was open for a 12-week period, from 2 May until 12 August 2025.

In total, the consultation received 172 responses. Responses were received from a range of stakeholders, including businesses, individuals, local authorities, sector representatives, professional bodies, rating agents and academics. A full list of respondents is included in annex a.

A summary of the responses received to each question is provided below. It does not aim to capture every point raised by respondents, but to highlight the key themes.

Some respondents did not answer every question. All percentages are based on responses to the relevant question, rather than the total number of respondents to the overall consultation.

Question 1: Do you agree with the proposal to introduce a lower retail multiplier?

The question was answered by 169 respondents, of which 81% supported the proposal and 16% did not. The remainder (3%) commented without specifying whether they supported the proposal. Specific comments were made by 155 respondents. 

Many respondents who supported the proposal did not provide detailed comments or just confirmed their view that it would support independent shops to compete with online retailers. Some respondents commented that it would also help smaller shops compete with larger retail businesses more generally and reduce empty properties. Other respondents who supported the proposal were of the view that the scope of the retail multiplier should be widened, to include other sectors (in particular, hospitality) or large retailers. There was some recognition among respondents who supported the proposal that it would increase administrative complexity.

The primary concern from respondents who did support the proposal was that the focus on small to medium sized retailers is too narrow. Respondents with this view argued that other businesses should benefit from a lower multiplier, often based on an alternative policy objective related to high streets and a broader range of pressures facing ‘property intensive’ sectors. The hospitality sector (e.g. pubs, cafes, restaurants and hotels) was most advocated for by respondents, based on a view that it is disproportionately affected by non-domestic rates and faces other challenges. Some also advocated for leisure and a small number for manufacturing or supply-chain sectors. There was also opposition to the retail multiplier from some respondents who were primarily concerned about the impact of the related proposal for a higher multiplier.

Other respondents who did not support the proposal favoured retaining a single multiplier for the whole tax-base, for a range of reasons related to the simplicity and fairness of the non-domestic rates system. Some were of the view that differential multipliers would add complexity, create confusion for ratepayers or result in some inconsistencies and unintended consequences. It was also suggested that regular revaluations and existing reliefs would address the relevant challenges. 

Question 2: Do you think the proposed definition for a retail multiplier would align with the policy intent?

The question was answered by 162 respondents, of which 56% agreed the proposed definition aligned with the policy intent and 43% did not. The remainder (1%) commented without specifying whether they agreed. Specific comments were made by 85 respondents. 

Most respondents who agreed the definition would align with the policy intent did not comment further or just confirmed their view that the selected property descriptions and rateable value threshold should cover most small independent retailers. Some respondents were of the view that the definition should generally work if the descriptions in rating lists are correct and consistently applied. It was noted that, in some cases, a property described as a shop may be used for a non-retail purpose, or other types of property may be partly used for retail sales.

The primary concern from respondents who did not support the proposed definition reflected their views that a lower multiplier should also apply to other sectors, particularly hospitality, as described in relation to question 1. These views were often based on an implicitly proposed (by the respondents) alternative policy objective related to the needs of high streets more generally, rather than the stated intent to re-balance the non-domestic rates system in favour of small to medium sized retailers specifically.

Some respondents were of the view that the proposed rateable value threshold appeared arbitrary or would risk disincentivising some businesses from improving their properties or expanding into larger premises. A related concern was that geographical variations in the sizes and associated values of properties may mean that businesses in some areas benefit more than others. A small number of respondents were concerned that it may not always be clear whether a property is primarily a retail shop. 

Question 3: Do you think a higher multiplier should apply to properties with a rateable value above £100,000 (subject to the described exclusions)?

The question was answered by 166 respondents, of which 56% supported the proposal and 41% did not. The remainder (3%) commented without specifying whether they supported the proposal. Specific comments were made by 135 respondents. 

Many respondents who supported the proposal did not provide detailed comments or just confirmed their view that larger businesses should be better able to afford to pay a slightly higher rate to support smaller businesses. Among respondents who supported the proposals, some commented that the level of the higher multiplier should be carefully considered, to recognise the contribution made by larger businesses to high streets and town centres. Some went further and suggested that certain sectors, such as retail and hospitality, should be excluded from a higher multiplier. The opposite view was put forward by respondents concerned about the impact of out-of-town retail and hospitality businesses on high streets. A small number of respondents suggested other exclusions from a higher multiplier.

The primary concern from respondents who did not support the proposal was that businesses occupying high value properties already make a large contribution to non-domestic rates revenue and should not be required to pay an additional supplement. Related comments emphasised the wider economic contributions made by large businesses, the range of additional costs they face and a concern that the proposal could disincentivise growth and investment. 

Some respondents argued that the rateable value threshold for any higher multiplier should be increased. Particular representations were made for the exclusion of retail and hospitality businesses from a higher multiplier, based on a concern that increased costs could risk business closures where margins are narrow. There were also specific concerns about the impact of a higher multiplier on high value industrial and manufacturing properties. As described in relation to question 1, other respondents opposed to the proposal favoured retaining a single multiplier for the whole tax-base.

Some respondents acknowledged or accepted the aim to ensure the proposals are revenue neutral overall, but found it difficult to reach a view without knowing the level at which a higher multiplier may be set. It was also suggested that the position in England should be considered when setting any higher multiplier, to minimise any potential influence on businesses located close to the border.

Question 4: Do you think the proposed definition for a higher multiplier would align with the policy intent?

The question was answered by 159 respondents, of which 51% agreed the proposed definition aligned with the policy intent and 46% did not. The remainder (3%) commented without specifying whether they agreed. Specific comments were made by 83 respondents. 

Most respondents who agreed the definition would align with the policy intent did not comment further or just confirmed their view that approach would enable the intended re-balancing of the non-domestic rates system to be achieved in a revenue neutral manner. As described in relation to question 2, some respondents were of the view that the definition should generally work if the descriptions in rating lists used to identify exclusions are correct and consistently applied. It was noted that this should not be a significant issue for the specific property types proposed for exclusion.

Of the respondents who specifically commented on the proposed exclusions from the application of a higher multiplier, most agreed they were appropriate. Some were of the view that offices should also be excluded where they are occupied by public bodies, even though there is no associated description in the rating list. A small number of respondents disagreed with the proposed exclusions from a higher multiplier, based on the view that they would create unfairness and inconsistency.

The primary concern from respondents who did not support the proposed definition reflected their opposition to a higher multiplier or view that it should not apply to particular sectors, particularly retail and hospitality, as described in relation to question 3. With respect to larger retail and hospitality businesses, some respondents were of the view that the scope of the higher multiplier would undermine the policy intent if it negatively impacts the necessary conditions they help to create for a viable and sustainable retail sector. Representations were also made for the exclusion of some other commercial property types in the leisure and industrial sectors. 

Some respondents who did not support the proposed definition were of the view that it could be better aligned with the policy intent if a much higher rateable value threshold was adopted. A specific suggestion of £500,000 was put forward by a small number of respondents. The related concern was that a threshold of £100,000 would capture some businesses which, although they occupy large properties, operate on low margins in a similar way to smaller businesses. A similar observation was shared by some respondents who generally agreed with the definition, but suggested that the rateable value threshold should be periodically reviewed to consider the outcome of revaluations and the wider effectiveness of a higher multiplier. 

Question 5: What, in your opinion, would be the likely effects of the proposals on the Welsh language? We are particularly interested in any likely effects on opportunities to use the Welsh language and on not treating the Welsh language less favourably than English. 

• Do you think that there are opportunities to promote any positive effects?

• Do you think that there are opportunities to mitigate any adverse effects? 

Relevant comments were provided by 74 respondents. Most did not think the proposals would have any effects on the Welsh language or were unsure. Some respondents felt that the proposals would have positive effects on the Welsh language by supporting shops in communities where it is commonly spoken. A small number were of the view that there would be adverse effects arising from hospitality properties not being subject to a lower multiplier or excluded from a higher multiplier.

Question 6: In your opinion, could the proposals be formulated or changed so as to:

• have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English

• mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Relevant comments were provided by 56 respondents. Most did not think any changes necessary, as the proposals would not have any effects on the Welsh language, or were unsure. A range of suggestions to encourage use of the Welsh language were primarily focused on providing support for small businesses, either through tax incentives or wider benefits. A small number were of the view that positive effects could be generated, and negative effects mitigated, if hospitality businesses were subject to a lower multiplier. 

Question 7: We have asked a number of specific questions. If you have any related points which we have not specifically addressed, please use this space to record them.

Further comments were provided by 99 respondents. Most respondents reiterated their support for or concerns about the proposals, as set out in responses to previous questions. Some welcomed the Welsh Government’s efforts to improve the non-domestic rates system and were of the view that the introduction of differential multipliers would be a positive step, even if they did not agree with every aspect of the proposals. 

The dependency on the accuracy of the description shown in a rating list, particularly in respect of the retail multiplier, was noted by some respondents. A small number suggested that the Valuation Office Agency reviews the application of relevant descriptions and recognised that their use would enable billing authorities to automatically apply the appropriate multiplier, avoiding the need for manual processes or applications. It was also noted that, on balance, the approach may be the best available option for delivering the proposals.

Additional comments were provided about the administrative and practical implications of the proposals for local authorities and the Valuation Office Agency. Some respondents anticipated increased enquiries from ratepayers seeking to understand or query their liabilities. It was also noted that local authority billing systems would need updating to support implementation of the proposals and some specifically requested financial support. 

Some respondents commented that it was difficult to provide a definitive view on the proposals without knowing the levels at which the multipliers would be set and the impact of the 2026 revaluation. A small number sought clarity about how the retail multiplier would interact with existing permanent reliefs. Comparisons were also made with the scope of temporary reliefs provided in recent years and with the new multipliers planned for England.

Many respondents commented on wider aspects of the non-domestic rates system, including concerns about the overall impact of liability. Some argued for other changes to address perceived issues and help incentivise growth. A range of suggestions for broader reforms were put forward.

Government response

The Welsh Government acknowledges the range of views put forward in response to this consultation. Whilst we recognise more ratepayers would like to benefit from a lower multiplier or be excluded from a higher multiplier, the consultation proposals received majority support from respondents overall. Following consideration of the consultation responses, the Welsh Government will take the steps required to enable the proposals to be given effect on 1 April 2026. 

The levels of all multipliers for 2026 to 2027 will be determined later this year, when all necessary information is available to inform those decisions. This will take account of the outcome of the next non-domestic rates revaluation, which will also take effect on 1 April 2026 and result in a re-basing of the standard multiplier which currently applies to all properties in the tax-base.

Retail multiplier

The specific policy objective of the lower retail multiplier is to permanently re-balance the non-domestic rates system in favour of small to medium sized retail shops, to support the ongoing viability and sustainability of the sector. This reflects the unique challenges faced by ‘bricks and mortar’ retail shops, not least through their exposure to competition from online retailers. Whilst other sectors of the high street economy would also be expected to benefit indirectly, through the visitor footfall supported by the retail sector, the consultation did not propose a ‘high street multiplier’. The Welsh Government appreciates that a proposal on that basis would likely suggest a lower multiplier with a broader scope.

The proposed retail multiplier is intentionally narrower in scope than the temporary relief provided in recent years, as we are seeking to respond to a specific ongoing issue rather than an unexpected economic shock. The retail sector is primarily conducted in-person using non-domestic property and partly, but increasingly, online. Internet sales now account for more than a quarter of total retail sales annually. As set out in the consultation, this gives rise to an imbalance with respect to the impact of non-domestic rates on the retail sector, which will not be addressed naturally over time through regular revaluations of the tax-base. 

For other ‘property-intensive’ sectors which cannot be taken online, changes in the market over time should be reflected in revaluations in a way which affects the whole sector more consistently. We recognise that there are several sectors of the economy which pay a large share of non-domestic rates, because they occupy a large proportion of the tax-base (which is not unexpected or unintended for a property tax). Retail is one such sector, but the fact that it makes a large overall contribution is not in itself the reason for this proposal. It is the context in which the retail sector makes its contribution which underpins the policy objective.

Higher multiplier

It is important that this policy can be implemented and sustained without reducing the overall contribution made by non-domestic rates to the funding of vital local services across Wales. A higher multiplier would raise a modest amount of additional revenue from high value properties in support of that aim. The Welsh Government recognises that there will be a balance to strike in the setting of the differential multipliers. It is anticipated that a marginal supplement on the higher multiplier would be sufficient to support a substantially lower retail multiplier.

The rateable value threshold proposed (above £100,000) reflects the composition of the tax-base in Wales. Excluding large commercial sectors from the application of a higher multiplier would undermine the opportunity to support revenue neutrality with a modest impact on those subject to it. Going further, a higher multiplier with very narrow scope would be incapable of raising sufficient revenue to have a material impact on the policy objective.

The Welsh Government recognises the contribution made by large retailers, including anchor stores and supermarkets, alongside the smaller retailers which are the focus of these proposals. These larger retailers also compete with their smaller counterparts and are often able to benefit from a substantial online operation alongside their physical presence. It is, therefore, considered fair and appropriate for retailers occupying large properties to make a contribution through the higher multiplier in the same way as other sectors.

Other considerations

The Welsh Government recognises the administrative and practical considerations described in some responses, with respect to the use of rating list descriptions. Whilst there are strengths and weaknesses associated with any potential approach to identifying eligible properties, we could not consider alternative mechanisms with our existing powers to set differential multipliers by regulations. The approach is intended to avoid the potential for geographic inconsistencies and ensure multipliers can be automatically applied by billing authorities, based on existing components of rating lists with associated rights of appeal. 

The relevant descriptions have been selected because they are applied to target property types which are wholly or mainly used for the sale of goods to visiting members of the public. As set out in the consultation, and reflecting the prevalence of small to medium sized properties within the tax-base, these descriptions cover nearly 95% of all retail shops. We are working with the Valuation Office Agency to ensure the relevant descriptions are applied consistently, to support implementation. This is our first use of new mechanisms for setting differential multipliers. We are intentionally starting with relatively modest proposals, so that we can learn from the practical considerations which arise during implementation.

Finally, we acknowledge that our proposals for differential multipliers have some similarities and some differences with the policies adopted in other UK nations, as summarised in the consultation. Equivalent rateable value thresholds are used to apply relevant multipliers in England or Scotland, whereas other differences in the scope of the retail and higher multipliers arise from the Welsh Government’s specific policy objectives. There are other important differences between the non-domestic rates systems in Wales and other UK nations, reflecting the unique composition of our tax-base and our long-standing support for small businesses. All eligible ratepayers will continue to benefit from our permanent statutory reliefs worth £250 million annually, regardless of which multiplier applies to their property.

The Welsh Government will bring forward the regulations required to specify the properties to which a retail or higher multiplier will apply, from 1 April 2026. This will enable local authorities to prepare their billing systems for the implementation of differential multipliers. The levels of all multipliers for 2026 to 2027 will be determined later in the year, when all necessary information is available to inform those decisions.

Responses were received from the following:

• A G Meek Limited
• Andrew Douglas
• Anita Woods
• Association of Convenience Stores
• Ben Rive
• Booksellers Association of the UK and Ireland
• Boots
• British Beauty Council
• British Holiday and Home Parks Association
• British Property Federation
• Caerphilly County Borough Council
• CAMRA: Campaign for Real Ale
• Caradog Hotels
• Cardiff City Council
• CBI Wales
• Celf Greadigol Ltd
• Chartered Institute of Public Finance and Accountancy
• Chartered Institute of Taxation
• Cheryl Jones
• Claire Hughes MP
• Clement Jones
• Colliers
• Conwy County Borough Council
• Country Land and Business Association Cymru
• Creative Hospitality Group
• Cresthouse Ltd
• Croeso Pubs Ltd
• Debrett Fires Retailer
• Denbighshire County Council
• Dr Rhys ap Gwilym and Dr Edward Jones, Bangor University
• Driftwood Designs
• Dunoon Hotels Ltd
• Empire Hotel
• Entain Plc
• Federation of Independent Retailers
• Federation of Small Businesses Wales
• Fisher German
• Flintshire County Council
• FOR Cardiff
• Gareth Allen
• Graham Peers
• Institute of Revenues, Rating and Valuation
• Joanne Creek
• Kayleigh Beirne
• Kristin Trichler
• Lidl
• M&S
• McDonald’s UK and Ireland
• Merthyr Tydfil Council
• Milkshed Workspace Penarth
• National Federation of Sub-Postmasters
• NCHA: The Association for Primary Care Audiology Providers
• Neos Hospitality
• Newport City Council
• Optometry Wales
• Origin Japan
• Pembrokeshire County Council
• Pips Pet Supplies
• Professor Mark Barry, Cardiff University
• Rating Surveyors’ Association
• Raymond Matthews
• Royal Institution of Chartered Surveyors
• Seren
• Stephen Hughes Ltd
• Swansea Business Improvement District
• Tata Steel UK
• The Colour Lounge
• The Co-op Group
• The Gamers Emporium
• The Gathering
• The Mineral Products Association
• The Revel Collective
• The Shopkeepers Campaign
• Theatr Clwyd
• Top Cards
• Torfaen County Council and Monmouthshire County Council
• Ty Hafan and Ty Gobaith
• UK Hospitality Cymru
• Uniper UK Ltd
• Vale of Glamorgan County Council
• Valuation Tribunal for Wales
• Vantastec Ltd
• Welsh Beer and Pub Association
• Welsh Local Government Association
• Welsh Retail Consortium
• Wrexham County Borough Council
• WSP GL Hearn
• Y Bwthyn

85 respondents who wished to remain anonymous.