Business rates reform will allow Scottish councils to create tailored relief packages

The Scottish Government's Local Government Minister Derek Mackay also announced that a wide-ranging review of the valuation appeal system would take place over the next year, with a new appeals system finalised before the next revaluation takes place in 2017.

In its response to a consultation on reforms to business rates, the Scottish Government also pledged a 2015 review of recent unpopular changes made to empty property relief, and to keep other reliefs under regular review in order to "ensure that benefit is directed where it is most needed".

Business groups cautiously welcomed the announcement, but said that the proposed changes did not go far enough.

"The proposals go some way to address the concerns expressed by business generally in relation to the whole business rates regime and is to be welcomed," said property law expert Ewan Alexander of Pinsent Masons, the law firm behind Out-Law.com.

"However, it does not go as far as business would have liked and it remains to be seen what take up will be by local councils, particularly when finances are so tight generally. The proposals will at least add another tool in to the kit which is available to try and help stimulate much-needed growth in many areas," he said.

The Scottish Government's announcement, which followed a three-month consultation on the plans, came shortly after retail expert Bill Grimsey called for a "root and branch review" of business rates as part of a report on regenerating the UK's struggling high streets. According to the British Property Federation (BPF), which has campaigned for reform of the business rates system in England and Wales, rates make up the third biggest outgoing for small businesses after rent and staff costs.

Business rates are charged on most non-domestic premises including shops, offices, warehouses and factories. Owners of vacant offices and shops in Scotland currently receive a 50% discount or relief on their business rates liability for the first three months that the premises are left lying empty, which then falls to 10%. Owners of empty industrial properties and listed buildings receive 100% relief for as long as the property is left lying empty. In addition the 'Fresh Start' scheme, which was introduced in April, allows new occupants of shops or offices that have been empty for at least a year to apply for a 50% discount on their rates over the first year of occupation.

The reliefs currently on offer to Scottish commercial occupiers are more generous than equivalent schemes in England, where relief on offices and shops is cut completely after three months and relief on industrial buildings is cut after six months. The Scottish rates relief package was worth more than £560 million to Scottish businesses in the last financial year, according to the Scottish Government.

"The Scottish Government already offers the best package of rates relief to businesses available in the UK," said Mackay. "Two in every five business properties across Scotland benefit from zero or reduced rates through the Small Business Bonus Scheme."

"Today's action plan will deliver a rates system in Scotland that supports sustainable economic growth and helps Scotland's businesses and communities. The Scottish Government is committed to maintaining the Small Business Bonus Scheme, and to matching the English poundage for the lifetime of this Parliament," he said.

The Scottish Government would write to every business in Scotland to ensure that all those that are eligible for this scheme were benefitting, he added.