The Challenges of Non‑Domestic Rates for Scottish Businesses

The Challenges of Non‑Domestic Rates for Scottish Businesses

Businesses across Scotland continue to face significant pressure from Non‑Domestic Rates (NDR), particularly as the 2026 revaluation takes effect from 1^st April. Many firms are experiencing steep rises in rateable values, growing administrative complexity, and uncertainty over future liabilities.

Key Challenges

1. Rising Rateable Values

The 2026 Revaluation has produced sharp increases in RVs for many sectors—especially hospitality, retail, and self‑catering. The Scottish Government emphasises that Ministers do not set RVs, which are determined independently by Scottish Assessors.
This limits government intervention and leaves businesses exposed to valuation shifts that may not reflect trading conditions.

2. Complexity of Reliefs and Transitional Arrangements

Relief schemes such as the Small Business Bonus Scheme, Revaluation Transitional Relief, and Small Business Transitional Relief are intended to cushion increases, but their rules are complex. The Government’s own worked examples show how small changes in RV can trigger significant changes in liability, often requiring detailed formulas to calculate relief.

3. Cash‑Flow Strain

Even with reliefs in place, many businesses will still see material increases in their net bills. From examples provided by Public Finance:

• A single small property moving from RV £11,900 to £14,000 ends up with a new bill of £841.75 after transitional relief.
• A self‑catering property whose RV rises from £11,000 to £15,000 ends with a £944.96 bill, despite previously paying nothing.
• A pub seeing RV rise to £41,000 faces a £9,210.34 bill even after reliefs.

These examples illustrate the shock many businesses face as reliefs taper and liabilities rise.

The Government’s Response (Ivan McKee MSP)

In his letter of 19 March 2026, Ivan McKee outlines the Government’s position:

• RVs are set independently, and appeals can be lodged from 1 April to 31 July 2026.
• The Government recognises concerns from the hospitality sector and has commissioned the Gill Review of valuation methods, due later in 2026.
• Transitional caps and relief examples have been provided to support understanding.

McKee’s response acknowledges the challenges but highlights the limits of what Ministers can do within the current valuation framework.

Conclusion

Scotland’s NDR system, while supported by various reliefs, remains challenging for businesses due to:

• Rising rateable values
• The complexity of relief mechanisms
• Cash‑flow increases even after transitional protections

With the Gill Review underway and the appeals window approaching, businesses will need to stay highly engaged to manage their NDR exposure and advocate for longer‑term reform.

Images: Response from Ivan McKee

If you'd like to receive the below examples then please email [email protected].

• SMALL BUSINESS BONUS SCHEME WORKED EXAMPLES
• SMALL BUSINESS TRANSITIONAL RELIEF WORKED EXAMPLES
• REVALUATION TRANSITIONAL RELIEFS WORKED EXAMPLES