This stakeholder update brings together the latest information provided by the Welsh Government on the Non-Domestic Rates (NDR) system in Wales.
Latest Updates
Local Government Finance (Wales) Bill
The Local Government Finance (Wales) Bill was approved by the Senedd on 16 July. The Bill is expected to receive Royal Assent on or soon after 13 August, when it will become the Local Government Finance (Wales) Act 2024. Further information about the Bill and its progress through scrutiny is available on the Senedd website.
In relation to NDR, the Bill delivers most of the proposals set out in our consultation on NDR reform in 2022. The timing of implementation varies for changes provided by the Bill, as summarised below.
Further information is included later in this update on the implementation of changes which will take effect on or soon after 14 October 2024 (two months after the Bill receives Royal Assent). These changes are:
- a revaluation in 2026 and every three years thereafter (sections 2 and 3);
- expanding the definition of a new building for the purpose of serving completion notices (section 7); and
- simplifying local authority discretionary relief by removing the timing restriction (section 8).
The next update will include further information about the implementation of the change which will take effect on 1 April 2025. This change is:
- strengthening the eligibility criteria for charitable relief for unoccupied properties (section 6).
There are no immediate implications of the NDR changes introduced by the other sections of the Bill. Regulations will be required, either to commence the changes themselves, or to implement any future policy proposals that the changes enable. These changes are:
- a power to change the revaluation year or cycle by regulations (section 4);
- powers to confer, vary or withdraw reliefs by regulations (section 5);
- a power to confer, vary or withdraw exemptions by regulations (section 9);
- a power to set differential multipliers by regulations (sections 10 and 11);
- duties for ratepayers to provide information to the Valuation Office Agency (VOA), to support more frequent revaluations (section 12); and
- a framework for counteracting advantages arising from artificial avoidance arrangements to be specified in regulations (section 13).
2026 Revaluation
The Bill confirms that the next NDR revaluation will take place on 1 April 2026 and every three years thereafter. We are already working with the VOA to prepare for the 2026 revaluation, based on the antecedent valuation date of 1 April 2024.
The new duties for ratepayers to provide information to the VOA, and to confirm annually that the information held about their property is correct, are intended to ensure three-yearly revaluations are sustainable over the longer-term. These requirements will not be used to prepare for the 2026 revaluation, which will rely on the VOA’s existing approach to gathering evidence. The duties will not take effect until we are satisfied that ratepayers can reasonably be expected to comply, using the online system and associated guidance to be developed by the VOA.
As part of the preparation for a revaluation, the Welsh Government sets the decapitalisation rates which will apply to properties valued using the ‘Contractor’s Basis’. This method is used to value specialised buildings in the public and private sectors (e.g. schools and hospitals). The existing lower (1.9%) and standard (3.4%) decapitalisation rates will be retained for the 2026 revaluation. The lower rate is applied to educational, healthcare, defence and public convenience properties.
Completion notices
Local authorities serve completion notices for new buildings. A notice confirms the day of completion, so that the new building can be added to the rating list and made liable for NDR from that date. The Bill expands the definition of a new building for this purpose. This change will take effect on or soon after 14 October 2024 (two months after the Bill receives Royal Assent).
The completion notice procedure will apply to buildings which, although not new in themselves, ceased to be included in a rating list because they were incapable of beneficial occupation while alterations were being made. It will also apply to a new part of a building added to an existing building (e.g. an extension or new floor). As a consequence, such buildings will be returned to the rating list in a timelier manner.
Simplification of discretionary relief
Local authorities have broad powers to award discretionary relief. The Bill removes a residual timing restriction, which meant they were unable to make or vary a decision to award discretionary relief more than six months after the end of the financial year to which a decision related. This change will apply to the current and future financial years, but it will not apply retrospectively to previous financial years.
Review of reliefs
As part of the wider reform programme set out for the current Senedd term, we have commissioned a review of NDR reliefs in Wales. This review is being undertaken to provide and insight into the effectiveness of the current financial support offered to ratepayers, to inform how the existing package of reliefs may be changed in the future.
There are three core strands to the research:
- Principles – develop a set of key principles to guide future changes to NDR reliefs.
- Practicalities – test and refine the developed principles, considering the practicality of the reliefs and their administration by local authorities.
- Perceptions – consider the perspectives of current ratepayers and their representatives, to further test and refine the developed principles.
A research contract has been awarded to Alma Economics to undertake the review. It will be completed over the next 12 months, culminating in the publication of a Government Social Research report. Stakeholders will be invited to engage with the review as the research progresses and your participation is encouraged where the opportunity arises.
Statistical bulletin on NDR in Wales
We have published our latest annual statistical bulletin on NDR in Wales. The bulletin includes data on the amount of NDR collected and reliefs provided, up to and including the 2022-23 financial year. We welcome any feedback from stakeholders.
NDR consultations
There are not any currently open or recently closed Welsh Government consultations on NDR.
Further information
We welcome feedback on this stakeholder update. Any comments or enquiries should be directed to: localtaxationpolicy@gov.wales.
The next update is planned for Autumn 2024 (provisional).
Useful links:
Welsh Government
Business Wales
Valuation Office Agency
Valuation Tribunal for Wales
Welsh Local Government Association
Senedd Cymru