Measures to reform the local tax system in Wales, including non-domestic rates and council tax, have become law following the official sealing of the Local Government Finance (Wales) Act.
The new legislation, which was passed by the Senedd in July, establishes a series of changes to improve the tax systems. It will make them fairer and work better for the future needs of Wales, by ensuring local taxes reflect economic circumstances more regularly.
It has introduced important changes to the local tax system and created a framework for a modern Wales, providing the necessary levers to adapt local taxation in the future, as circumstances and priorities change.
For non-domestic rates (also known as business rates), the Act will:
- increase how often the values of all non-domestic properties in Wales are updated, to once every three years;
- provide more flexibility to make changes to reliefs and exemptions;
- enable changes to the calculation of payments for different categories of ratepayers;
- close known tax avoidance arrangements and increase our ability to tackle future avoidance in a more responsive way;
- enable improvements to the information provided by ratepayers
In relation to council tax, the Act will:
- establish a five yearly cycle of property revaluations from April 2028 onwards, and allow Welsh Ministers to amend future revaluation years should circumstances require this;
- provide more flexibility for the organisation and labelling of tax bands if required, to fit future possible redesigns of the system;
- ensure the continuation of our national Council Tax Reduction Scheme, providing essential financial help to low-income households;
- provide more flexibility to make changes to discounts and persons disregarded from paying council tax
Attending the sealing ceremony, First Minister Eluned Morgan, said:
“Extensive research and experience, especially during the Covid-19 pandemic and cost-of-living crisis in recent years, has shown that our local tax systems need to be more agile so that we can respond to changing conditions for people and businesses.
“I’m pleased the Local Government Finance (Wales) Act provides the framework we needed to modernise both our non-domestic rates and council tax systems in the future. Local taxes help fund essential public services such as schools and social care, from which we all receive a huge benefit.
“I’d like to thank everyone involved in this landmark Act, in particular local government, and organisations representing households and businesses.”
