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Additional support announced for Scottish businesses affected by rates changes

Hotels, renewable energy developments and other businesses particularly affected by changes to business rates in Scotland will receive additional support over the coming financial year, the Scottish Government has announced.22 Feb 2017

The Scottish Government will also take "early action" to implement the recommendations of former RBS chair Ken Barclay's review of the Scottish business rates system, which is due to report in July, finance secretary Derek Mackay said in a statement to the Scottish Parliament.

Mackay said he was taking action to help those sectors and regions in which April's increase in rateable values was "out of kilter with the wider picture of the revaluation".

"With the further measures we are now taking, combined with the powers and investment we have provided to local councils, that is a good deal for businesses, a good deal for public services, and a good deal for the Scottish economy," he said.

The new measures announced by the Scottish Government include capping any increases in rate bills for hotels, pubs, restaurants and cafes at 12.5%. A similar cap will apply to increases on office buildings in Aberdeen and Aberdeenshire, where economic conditions have been impacted by the recent oil price crash; while the government will "work with local authorities" to introduce tailored rates relief schemes for sectors and localities in their own areas.

Rate bill increases will also be capped at 12.5% for small-scale hydro schemes, while a new 50% rates relief will be introduced for district heating schemes, according to the announcement. Current rate relief arrangements for qualifying community projects will continue, Mackay said.

Those that wish to appeal their revaluation will be able to do so without paying a fee, unlike elsewhere in the UK, according to the announcement. Altogether, around 9,500 Scottish businesses are expected to benefit from the additional support.

Business rates are charged on most non-domestic premises including shops, offices, warehouses and factories. Properties are usually revalued for rates purposes once every five years, based on rental values at a date two years before the date the revaluation takes effect.

New rates will come into force from 1 April 2017, based on the rental value of properties as of 1 April 2015. The revaluation was postponed by two years by the Scottish Government given the impact of the 2008 financial crash on the commercial property market, after the UK government announced a similar delay to the revaluation for England and Wales.

The Scottish Government has already raised the rateable value threshold at which businesses will be required to pay rates from £10,000 to £15,000 as of 1 April, and reduced the 'poundage' rate at which the tax has paid by 3.7%. Seven out of ten properties are expected to pay the same or less once the new rates take effect, while more than half of all premises will pay no rates at all, according to the government.