Finance Secretary Derek Mackay has told MSPs that he will implement the vast majority of recommendations made by the Barclay Review, with new properties not paying Business Rates until they are occupied and their tenants exempt for the first 12 months thereafter.
In some cases the government’s new plans will go further than the recommendations of the review, Mr McKay said in a statement to Parliament.
As well as a Business Growth Accelerator – which will also free all improved business premises from increases in their rates bill for one year, he also confirmed that, in a UK first, nurseries will be fully exempt from business rates.
Also confirmed was that a cap in rate rises for the hospitality sector and offices in Aberdeen and Aberdeenshire, first announced in February, will continue next year with an additional 12.5 per cent cap in real terms.
The moves come after the Barclay Review found that the current system whereby improvements in a property lead immediately to increases in the rates bill, deterred investment.
The announcement forms part of a package designed to stimulate the economy, reduce red tape, improve transparency and reduce tax avoidance.
Mr Mackay said: “The Barclay Review presented us with the opportunity to evaluate how we handle business rates and improve methods to make Scotland the most competitive place in the UK for businesses to invest and grow. I committed to respond quickly and three weeks after receiving the report, I am delighted today to put our response into action.
“These new measures will help stimulate the economy and create jobs, which is key to readdressing the inequality that still exists in our society, as well as strengthening Scotland’s business appeal and generating new growth avenues.”
The proposals were broadly welcomed by Scotland’s business leaders.
Hugh Aitken, CBI Scotland director, said: “The Scottish Government’s swift response to the Barclay Review is welcome, as is the intention to put in place a concrete plan for implementing recommendations before the end of 2017.
“In addition to making rates better reflect economic realities, more regular revaluations of properties and the creation of the Business Growth Accelerator, CBI Scotland has called for a separate review of plant and machinery valuations and we are pleased to see that this will be put into action.
“For the Scottish Government to truly go ‘beyond Barclay’, we would strongly urge them to give serious consideration to linking inflation increases to CPI rather than RPI. This remains an ongoing priority for many companies and would help deliver a business ratesregime that really is simpler, fairer and more competitive.”
Moira Kelly, chair of the CIOT Scotland Technical Committee, said: “Last week, the first minister said that the Scottish Government would act “quickly” to take forward the recommendations of the Barclay Review. It is therefore encouraging that the finance secretary has not only committed to taking forward the vast majority of Ken Barclay’s recommendations, but to do so in a manner that appears at first glance to recognise the need for a holistic approach to rates reform.
“The immediate priorities of moving towards more frequent property valuations and delaying rate increases for new, refurbished or expanded properties represent pragmatic and sensible options for ironing out some of the disadvantages inherent in the present system.
“These can provide ratepayers with tangible examples of reform within the boundaries of a system that will remain broadly similar.
“As it takes forward the wider recommendations of the review group, the Scottish Government must ensure that ratepayers and stakeholders understand how these changes will impact them and commit to helping them navigate the inevitable period of transition that will follow.”