The Scottish Business Rates Revaluation has been grabbing the headlines in the run up to its start date of 1 April 2017, and we break down the significant issues ahead of its implementation.

  1. The revaluation of business rates in Scotland has been attracting attention, due to the recently reported drastic increases in rateable values for some commercial properties in Scotland. This is especially pertinent for the, already pressed, hospitality industry and licensed trade. There is also additional strain on some businesses in the north-east which will bear the brunt of increases at a time when they are under pressure due to the fall in oil prices and resulting impact on the energy industry.
  2. The increases have been compounded by the fact that there was a postponement of the 2015 revaluation for a further two years to align with our neighbours south of the border. This means that the April 2017 valuation is catching up to deal with the fact that the valuation is 2 years later than planned, which in some cases has led to steeper increases due to the longer time lapse since the last valuation (in 2010).
  3. However, it’s not all doom and gloom - rates relief for small businesses in Scotland, known as the Small Business Bonus Scheme, has been extended under the 2017 Revaluation to apply 100% relief to any premises with a rateable value of £15,000 or less (previously the top threshold below which nil would apply was £10,000) and rural rates relief has also been increased.
  4. That said, there shall be no transitional relief applied, despite several respondents to the Scottish Government consultation (including several trade bodies, energy companies and NHS boards) insisting this was required, especially in light of the lack of availability of the draft rateable values at the time of the consultation. As such, many businesses in Scotland were facing huge increases in their rates bill from 1 April 2017 with very little time to prepare for this eventuality.
  5. On 21 February 2017, in response to growing pressure from occupiers, Derek Mackay, Cabinet Secretary for Finance and the Constitution for the Scottish Government, announced that:
    • There will be a cap on increases of 12.5% for hotels, pubs, restaurants and cafes;
    • There will be a cap on increases of 12.5% for office premises in the Aberdeen City and Aberdeenshire areas in recognition of the adverse market conditions in which they are currently operating;
    • Renewable energy companies including those operating hydro schemes will be eligible for relief;
    • The Government will be working with Local Authorities in connection with the introduction of local rates relief schemes (already under investigation in Perth and Kinross – see our Law-Now on this here); and
    • There will be early action on the findings of the Barclay Review into Business Rates - due in the summer of this year.
  6. Whilst, these measures will no doubt be welcomed by the Scottish business community, there is no detail on whether these are temporary arrangements or will exist until further reform is introduced. With this in mind, it is of upmost importance that any business who considers their revaluation to be incorrect appeals this before 30 September 2017. After such time, a rateable value cannot be challenged unless there is a material change in circumstances (and this does not include a drop in economic activity).