Further update on planned changes to the non-domestic rates system in Scotland

Published on: 25 January 2023

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The third update from British Marine Member, Gerald Eve, on the 2023 Rates Revaluation in Scotland.

At a glance: 

  • Update following the publication of the Draft Scottish Budget for 23/24 by the Scottish Government
  • Opportunity to engage with assessors to discuss valuations ahead of the new more complex appeals process being introduced from 1 April

Following the publication of the Draft Scottish Budget for 23/24 by the Scottish Government last month, Gerald Eve has provided a summary of some relevant detail below.

Uniform Business Rate (UBR)

The Scottish Government has formally announced the freezing of the basic UBR for 2023 at 49.8p, avoiding the inflation-based increase that was predicted. This aligns with the budget announcements in both England and Wales. Freezing the basic property rate is forecast to save Scottish Business approximately £308m compared to an inflationary increase.

Small Business Bonus Scheme (SBBS)

The support for small businesses has been extended. The Finance Minister has confirmed the reform and extension of the Small Business Bonus Scheme with 100,000 properties continuing to pay no rates. However, the threshold has been reduced from properties with a rateable value of £15,000 to £12,000.

Relief of 100 percent will be available for properties with a rateable value of up to £12,000 and the upper rateable value for individual properties to qualify for SBBS relief will be extended from £18,000 to £20,000.

The Scottish Government is tapering the SBBS relief for properties between £12,001 and £20,000: relief will taper from 100 percent to 25 percent for properties with rateable values between £12,001 to £15,000; and from 25 percent to 0 percent for properties with rateable values between £15,001 to £20,000. The combined rateable value of all business premises must be £35,000 or less and, the rateable value of individual premises is £20,000 or less.

The 2023 Draft Valuation Roll was published by the Scottish Assessors Association on 30 November 2022. These new values will form the basis of the rates for non-domestic properties from 1 April 2023 for at least the next three years.

Given the reduction of the Small Business Bonus Scheme (SBBS) thresholds, many businesses may now be liable for business rates payments. 

Following the budget announcement, 19,000 properties will lose some or all their eligibility for SBBS relief or Rural relief. The Scottish Government will offer a Small Business Transitional Relief to ensure that properties that lose SBBS or Rural rates relief eligibility do so in a phased manner.

Other Reliefs

A transitional relief scheme was also mentioned during the budget, and as ever, the devil is in the details and we are still awaiting the definitive details. However, we do know that a Revaluation Transitional Relief will be introduced to protect those most affected and cap rates increase up to the next revaluation in 2026. Increases in NDR liabilities due to revaluation will be capped at 12.5 percent (cash terms) in 2023-24 for small properties, rising in subsequent years.

In addition a Small Business Transitional Relief will be introduced for those losing or seeing a reduction in Small Business Bonus Scheme Relief or Rural Rates Relief (including due to SBBS exclusions) on 1 April 2023. The maximum increase in the rates liability relative to 31 March 2023 will be capped at £600 in 2023-24, rising to £1,200 in 2024-25 and £1,800 in 2025-26

The Scottish Government announced that there will be a scheme to incentivise investment in renewables through the introduction of new prescribed plant and machinery exemptions for onsite renewable energy and storage.

The eligibility criteria for reliefs will soon become clear, with specific detail on eligibility in relation to Subsidy Control.

Barry McEwan, partner in Gerald Eve’s Glasgow office, added: “There is now an opportunity to engage with assessors” and highlights that “the publication of the draft roll offers a chance for businesses to contact assessors to discuss valuations, and perhaps influence or even pre-agree rateable values which could avoid submitting formal proposals under the new complex Appeals Regulations being introduced from 1 April 2023.”

British Marine has a number of members which may be able to offer further advice regarding the 2023 Revaluation.  

British Marine would encourage members in Scotland to consider the proposed changes ahead of the 2023 Revaluation and thank Gerald Eve for providing this update.

Contact Info:  www.geraldeve.com

Barry McEwan, partner, tel 0141 227 2377 or email BMcewan@geraldeve.com

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