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More than 100 childcare providers in Wales will be exempt from paying business rates from April next year, the Welsh Secretary for Finance has announced.
Under the new scheme, the upper threshold for business rates relief for childcare settings will increase from £12,000 to £20,500. But whilst the move is expected to benefit those who pay the highest business rates, more than four in ten private and voluntary childcare settings in Wales will not be exempt.
Announcing details of the scheme, the finance secretary Mark Drakeford, said: “The Welsh Government has previously set out our intention to introduce a permanent small business rates relief scheme from 1 April 2018. This will provide certainty and security for small businesses in Wales, delivering a tax cut to help them drive long term economic growth.
“In 2017-18, we are providing small businesses with more than £110m of support in paying their rates bills. Our permanent scheme, which will be in place from 1 April 2018, will maintain this investment from the Welsh Government.
“In line with our tax principles, the new scheme will target the support more effectively towards the businesses that will benefit most, supporting jobs and growth and delivering wider benefits for our local communities.”
The announcement follows the decision by the Scottish Government to make all nurseries exempt from business rates from April 2018.
The news has been welcomed by the nursery sector, with Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) Cymru, calling it a “step in the right direction”.
She said: “At a time when margins are squeezed with rising staffing costs and inflation running at over three per cent, any support given to the early years sector is positive.”
Four in 10 Welsh nurseries still miss out on exemption
However, she points out that more than four in ten private and voluntary nurseries will still be subject to business rates and argues that the sector should be given ‘total exemption’.
She added: “The Welsh Government is expecting private and voluntary nurseries to deliver the childcare offer for Wales - 30 funded hours to three- and four-year-olds, which is the most ambitious scheme of its kind in the UK. We would like to see further support made available to those nurseries that fall outside of this rates threshold.
“In Scotland, nurseries have been made a special case and will be exempt from business rates completely from April 2018. The Welsh Government is offering a similar deal to a significant number of its nursery businesses but there has been no positive move made at all for nurseries in England.
“We hope that the Department for Education takes note of these developments and looks at how it in turn can support its struggling early years businesses which are delivering the lion’s share of funded hours at rates below the market cost.”