Scottish businesses experience 10% decline in rate bills following revaluation

Scottish businesses experience 10% decline in rate bills following revaluation

Scotland’s shops and eateries have experienced a decline in business rates, following the Scottish Government’s revaluation which commenced last month, resulting in an approximate 10% reduction in business rate bills.

The largest decreases are seen in bigger establishments, with retail bills dropping by 13% for rental valuations between £100,000 and £1 million. Smaller premises, however, have seen greater reductions owing to the Scottish Government’s Small Business Bonus Scheme.

Meanwhile, the hospitality sector, including pubs, restaurants, and a majority of hotels, are also benefiting from an average 5% decline in bills.

This reassessment, which accounts for changed rental values, comes after a six-year hiatus. It forms the foundation for a £3.86bn tax collection and exhibits noticeable regional variations. The city of Aberdeen has benefited greatly with a total business rates bill reduction of 17%, offsetting the sharp increases seen in the 2017 revaluation due to high oil prices.

Contrarily, industrial properties including factories have seen rateable values rise by 10%, resulting in an 8% increase in bills. A surge is particularly noticeable in the largest industrial sites. Furthermore, “designated utilities” including power transmission lines, pipelines, and telecoms, have seen their bill rise by 13% to £840m, marking the most significant rise in total costs.

A transitional relief system has been instituted to mitigate the unpredictability of business rates, leading to an average decrease in hotel bills, despite a minor increase in valuations. However, the relief was not universal. In places like Argyll and Bute, hotel valuations have escalated by 60%, and in Moray, whisky distilleries have seen their valuations rise due to higher attributed value.

The 2023 non-domestic rates revaluation led to a total rateable value increase of £390m or 5.36%. Despite the rateable value rise, the average gross bill saw a modest rise of 3.37% due to the general revaluation transitional relief.

The Scottish Government has set the poundage or tax rate at 49.8p for every £1 of rateable value for the financial year 2023-24, with properties of higher value facing additional supplements.

In light of these changes, Scottish retailers are advocating for reform, alleging that the current system puts traditional shops at a disadvantage against their online competitors.

There has also been criticism of the system’s inflexibility amidst fluctuating revenue and profitability. As part of a New Deal for Business, further reform of business rates is one of the tasks being considered by the advisory group appointed by First Minister Humza Yousaf.

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