Business Rates in Scotland 2017

During the Scottish Government’s Scottish Budget announcement on 15 December 2016, the Finance Secretary made a number of important announcements regarding changes to Business Rates in Scotland in 2017. These changes will have a significant impact on businesses’ rates bills for 2017-18, with some businesses benefitting, whilst others will see their liabilities increase – in some cases substantially. The announcements made by the Scottish Government cover the 2017 Rating Revaluation and changes to reliefs and surcharges for 2017-18.

The Barclay Review of Business Rates is still due to report by July 2017 and this may recommend further changes to Business Rates in Scotland, however these would not apply until 2018-19 at the earliest.

The 2017 Rating Revaluation

Scotland’s local Assessors have completed their process of revaluing non-domestic property in Scotland and the results have been published on their website: www.saa.gov.uk

This website contains details of the current valuation for the property, effective from April 2010, and the new valuation, effective from April 2017, in order to allow a comparison to be made.

Simply type the business address or postcode into the search facility and click on more information, this will give you the option to look at the proposed 2017 valuation.

We would recommend that all businesses use the www.saa.gov.uk website to find their new rateable value as soon as possible, if they have not already done so. If a business believes that their new valuation is incorrect, then they should appeal against it once the formal valuation notice is issued and details of how to do this are also contained on the website. Businesses may wish to consider seeking professional advice from a rating professional in this regard.

We are already aware of a number of businesses whose rateable value has increased substantially as a result of the revaluation, in some cases by as much as 250%. The earlier a valuation is checked; the more time will be available to determine a course of action.

In order to calculate the Business Rates bill, the rateable value is multiplied by the Poundage Rate and then any reliefs are applied. Details of these were also announced in the Scottish Government’s Draft Budget.

Scottish Government Changes for 2017-18

In its Draft Scottish Budget for 2017-18, the Scottish Government proposed a number of changes to business rates.

Poundage Rate

For businesses with a rateable value of up to £51,000, the poundage rate that will apply for 2017-18 will be 46.6p in the pound – a reduction from the 48.4p which applied in 2016-17. For example, this means that the business rates bill for a property with a rateable value of £40,000 (ignoring any applicable reliefs) would be:

£40,000 x £0.466 = £18,640

For businesses with a rateable value of over £51,000, a 2.6p surcharge – the Large Business Supplement – is added to the poundage rate. For example, this means that the business rates bill for a property with a rateable value of £70,000 (ignoring any applicable reliefs) would be:

£70,000 x £0.492 = £34,440

Transitional Relief

The Scottish Government has announced that, as was the case at the last revaluation in 2010, there will be no transitional relief for businesses whose rates bill increases substantially as a result of the rates revaluation, meaning that the new rates bill will be liable to be paid in full in the first year rather than phased in over a number of years.

Small Business Bonus Scheme

For smaller properties, the Small Business Bonus Scheme has been extended in 2017-18, meaning that premises with a rateable value of up to £15,000 will receive a 100% relief from rates. Details of the proposed Small Business Bonus arrangements for 2017-18 are as follows:

* Eligibility subject to compatibility with State Aid rules.

** A ratepayer with multiple properties with a cumulative RV between £15,001 and £35,000 can be eligible for 25% relief for individual properties each with RV up to £18,000.

Other Reliefs

There are changes proposed to three reliefs in 2017-18:

• In common with forthcoming changes in England, it has been proposed that the mandatory part of rural relief increases from 50% to 100% (with no change to eligibility).

• It has been proposed to expand renewables relief (for certain schemes with community benefit and new-build schemes). Details are expected to be set out soon.

• The Scottish Government, in common with the UK Government, intends to propose a new relief for new broadband fibre infrastructure, subject to further consideration. Again, details are expected to be set out soon.

All other reliefs are proposed to roll forward unchanged into 2017-18.