Almost 30,000 businesses will see a cut in their rates

Altogether almost half of all businesses in Wales will benefit from a sharp drop in rates from next year.

A scheme set up to help rural businesses during the foot-and-mouth outbreak is to be extended to the rest of Wales from 1 April 2007.

The changes will mean that almost 30,000 small businesses will see a 25% to 50% cut in their rates.

The assembly government has proposed to replace the rural rate relief scheme - that operates in the predominantly rural areas of Wales - with a small business scheme that applies to the whole of Wales.

It will give businesses with a rateable value under �2,000 a 50% reduction in their rates.

Poorest parts

Finance Minister Sue Essex said the assembly government recognised that small businesses made an "essential contribution" to communities across Wales.

The minister said it would particularly help the poorest parts of the country.

BUSINESS RATES SUMMARY Businesses in Wales with a rateable value of under �2,000 will receive an automatic 50% off their rates Businesses with a rateable value between �2,000-�4,999 will receive a 25% discount Post offices with a rateable value of less than �9,000 will be exempt from paying business rates Post offices with a rateable value between �9,000-�11,999 will receive 50% relief. It will replace the temporary rural rate relief scheme It will be automatically applied to rates bills without businesses needing to apply. Source: Welsh Assembly Government

"The new scheme is much fairer than the current rural rate relief system. It treats all small businesses in Wales equally whatever their location and will be much easier to understand and administer," she added.

'Automatically applied'

She said the new scheme would be "entirely funded" by the assembly government.

Keith Richards, who represents sub-postmasters in Wales, said it was excellent news.

"The majority of sub-postmasters are going to be very happy with this and communities have got a better chance of keeping their post offices," he said.

Rob Greaves, who runs Hakin post office, Milford Haven, said: "I've spoken to two people, one's going to save �500 and one's going to save �700.

"It's quite significant. It will help keep overheads down. It will pay two or three gas bills."

The Federation of Small Businesses in Wales (FSB) said the announcement was a "step forward" but would have preferred a system applying in England.

Spokesman Russell Lawson said: "The system in England has applied to all small businesses and it's easy to understand."

He added: "At least they're paying attention to the lower end of the spectrum-high rates have had a disproportionate impact on smaller firms, who can end up paying the same rates as much bigger more profitable companies."

But the assembly government said the FSB's reaction was "disappointing" and that the proposed scheme was "much easier to understand and administer" than schemes elsewhere in the UK.

A spokeswoman added: "The proposed scheme will be automatically applied to all eligible businesses in Wales without businesses needing to go through the onerous task of application."

The current rural rate relief scheme - set up in the wake of foot-and-mouth - was due to come to an end in 2004, but was extended during the consultation period.