Hospitality faces up to 70% rates increase, FSB Wales says
The Federation of Small Businesses Wales has written to the Welsh Government’s Cabinet Secretary for Finance, Mark Drakeford MS, warning that Budget 2026/27 will have a severe impact on hospitality and leisure firms.
In its letter, FSB Wales said its Small Business Index shows confidence at minus 58 points.
It said 30% of small firms now expect to downsize, close or sell in the next 12 months, compared with 18% planning to grow.
According to FSB Wales, 68% of businesses cite the domestic economy as their top concern, with 45% identifying tax burdens as a key issue.
The organisation said it welcomed the introduction of a new retail multiplier to reduce pressure on shops.
However, it raised concerns that hospitality and leisure businesses are excluded.
FSB Wales said its analysis indicates a typical small retailer will face an 18% rise in business rates.
A hospitality or leisure business with the same rateable value would see a 40% increase by the end of the transitional period, it said.
For medium-sized properties in those sectors, bills could rise by as much as 70% once transitional relief ends.
The Welsh Government has announced a 15% relief for pubs, music venues and restaurants alongside transitional relief for the next budget year.
FSB Wales said this would slow the increase in bills in the short term but that, by the end of the three-year transition period, many businesses would face significant rises.
It also said 6,500 properties will be placed into business rates for the first time because the Small Business Rate Relief threshold remains frozen.
Joshua Miles, Head of FSB Wales, said: “Hospitality and leisure businesses are the lifeblood of our towns and city centres right across Wales, yet they are being hit with far steeper rates increases than retail. Many are already operating on wafer thin margins and these rises risk closures, job losses and empty properties in town and city centres across Wales. We call on the Welsh Government to include hospitality and leisure in the new retail multiplier to support these vital sectors and to raise the Small Business Rate Relief threshold to £12,000, to match England.”
FSB Wales said it is asking the Cabinet Secretary to act to prevent further damage to the Welsh economy and to protect businesses operating on high streets across Wales.
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