Wales childcare provider business rates scrapped

Registered childcare providers will not have to pay business rates in Wales

Registered childcare premises in Wales will no longer have to pay business rates.

The Welsh government has announced that registered childcare premises will retain their small business rates relief (SBRR) on a permanent basis.

One south Wales premises, the Daisy Day Nursery, said it had been "feeling a bit of dread" for next year, but described the decision as "huge".

Although childcare premises have been granted this exemption since 2019, it was due to run out on 31 March 2025.

“Making 100% rates relief for childcare providers permanent will provide this sector with stability, helping providers to invest the savings back into their business,” said ministers Dawn Bowden and Mark Drakeford in a joint statement.

They said the move would save childcare providers an estimated £3.4m a year.

“This underlines our support for childcare in Wales and our ongoing aim for settings to be financially sustainable,” Ms Bowden, the minister for children and social care, and Mr Drakeford, the finance secretary, said in a joint statement.

“It recognises that childcare settings offer positive and caring environments for children, supporting their rights as enshrined in the UNCRC (UN Convention on Rights of a Child) to be safe, to play, to have an education, to be healthy and be happy.

"It also recognises the essential role childcare plays in our economy, helping parents into work, education or training.”

Childcare providers have been under significant pressure due to rising costs, and Daisy Day Nursery, which is in Cardiff and Barry, Vale of Glamorgan, said it was no different.

“We were feeling a bit of dread heading into 2025, wondering what that next financial year was going to look like," said business development manager Helen Sherrin.

The nursery has been providing childcare since 2004 but was concerned about the reintroduction of business rates.

“It’s going to mean not just providing for 2025 but seeing it through and being able to invest in their settings and doing the things that they want to be able to do as childcare providers, and provide quality of service to the families that use us," said Ms Sherrin.

"We just can’t do that when there’s so much financial pressure on us.”

“We’re hesitant to transfer that to our parents because we know how hard it hits them as well, and they’re already struggling with their income.

"They’re already seeing a big portion of their outgoings going towards childcare costs. Whatever we can do to minimise the impact that our own struggles has on them, we’d like to be able to do that.”

The extension of the Welsh government’s tax exemption is intended to help ease the strain on premises across the country.

Sarah Rees, head of Oxfam Cymru, said: “While any investment in childcare is welcome, what parents and providers truly need is a clear, cohesive plan for the future of funded childcare, underpinned by sustained investment.”

Currently, families across Wales must wait until the school term after their child has turned three to access funded childcare.

Meanwhile, families in England can access funded childcare for children as young as nine months old.

“Affordable, accessible childcare is key to lifting families out of poverty, yet in Wales, parents are navigating a confusing patchwork of provision," said Ms Rees.

"The upcoming Welsh budget must commit more money to childcare and outline a concrete plan to deliver on long-promised funded childcare for all two-year-olds. It’s time to move beyond promises and take real action so families across Wales can build better futures.”

The Welsh government said this announcement was just part of a £100m a year investment into childcare in Wales.

“Everybody in the sector just wants childcare to be inclusive, and accessible, and for the benefit of the family," said Ms Sherrin.

"I think, with that in mind, there is always going to be more we can do. I think the Welsh government are heading in the right direction with the provisions they’re making.

“There’s more to be done – how realistic that is, I don’t know.”