Scottish Budget paves way for Business Rates reforms

Brian Rogan, Head of Rating at leading property consultancy CBRE Scotland (Photo: Ross Johnston/Newsline Media)

On Wednesday, as part of Scotland’s 2019/2020 Draft Budget, Cabinet Secretary Derek MacKay made a number of announcements relating to the reform of Non-Domestic Rates in Scotland. The main announcements included confirmation of a lower than inflation increase in the Uniform Business Rate next year and that a new Non-Domestic Rates Bill will be introduced early in 2019 proposing significant changes to the business rates regime in Scotland. The bill will take forward some of recommendations of the Barclay Review in 2017 – these include three-yearly revaluations from 2022.

The Cabinet Secretary also announced that the New and Improved Property Relief scheme will continue in 2019/20, as will the transitional relief for the hospitality and office sectors in Aberdeen, which was introduced to help those who witnessed significant increases in their rates bills after the 2017 Revaluation.

Commenting on the announcements, Brian Rogan, head of business rates in Scotland for CBRE, said: “The news that the 2019/20 Uniform Business Rate is going up by less than the usual RPI uplift is somewhat welcome, however bills are still going up. Further relief for hospitality properties and office occupiers in Aberdeen being carried forward is a token gesture as there will be a limited number of recipients who qualify for the transitional relief due to cap levels and state aid rules. What businesses in those locations are telling me is that this is a sticking plaster, and that a much clearer and fairer appeal system which unequivocally allows bills to reflect the current reduced rental values, caused by changes in circumstances in the local economy, is what’s required. Hopefully the new Bill being brought forward next year will address this.”

“The Scottish Government has failed yet again to listen to North East businesses on this aspect and, by failing in this budget to take the opportunity to reform the appeal legislation or at least bring the 2022 Revaluation forward in line with the rest of the UK and have a Revaluation in 2021 will cause further pain for businesses in the North East of Scotland. Furthermore there will be significant administrative challenges for all businesses operating on both sides of the border with the Scottish Revaluation being out of sync with the Rest of the UK.

“On a more positive note the New and Improved Property Relief legislation is innovative and can significantly help occupiers planning to move to new builds or refurbish existing premises, but the qualification requirements for this relief are extremely complex. Therefore, anyone who thinks they might be entitled to it should take professional advice immediately, as the regulations governing entitlement require expert navigation.”