Non-domestic rates - an update following the Scottish Government’s budget

MortonFraser_Alan Stewart
Alan Stewart
24 March 2021
Real Estate

With national restrictions still in place, many businesses continue to face a fight for survival. Reason for optimism is, however, on the horizon. 

Perhaps largely down to continued rollout of the vaccination programme, businesses are hopeful that the summer months will bring a return to normality and inject much needed revenue, paving a road to recovery. The economic relief package to date has provided necessary support for businesses during these unconventional times. With many businesses’ doors remaining firmly closed, non-domestic rates reliefs are playing a key role in fuelling the fight for survival. 

1 April 2021 is a key date for a number of changes to the non-domestic rates regime in Scotland. In particular, the Scottish Government announced there will be an extension to the ongoing 100% relief for the retail, hospitality, leisure and aviation sectors for a further 12 months meaning those sectors will not pay rates throughout the financial year 2021-22. This will no doubt be a welcome addition to the ongoing relief package. Even at the stage businesses may re-open, rates relief will provide a much needed boost to profits as they seek to reach pre-covid trading levels. The Chancellor has confirmed the same relief will continue to apply in England until 30 June 2021, following which rates will be discounted by two thirds until 31 March 2022.

1 April also sees the following changes to two perhaps lesser known reliefs in attempts to aid the recovery for businesses:

Fresh Start Relief

This relief aims to support businesses which take occupation of previous long-term vacant properties.

Provided the property has been empty for at least 6 months and is within the rateable value threshold outlined below, the property is entitled to receive 100% relief for up to 12 months from the date of occupancy. 

From 1 April, the threshold for applicability of this relief will increase for properties with a rateable value of £65,000 to £95,000.

This may be of relevance with an increase in businesses having little option other to permanently close their doors due to the pandemic and no doubt is a relief likely to become more prominent as the businesses hope to re-start in the near future.

It is also worth noting that the usual empty property reliefs continue to be available. All empty properties are eligible for 50% relief from rates for the first 3 months and then a 10% discount applies thereafter. Industrial properties receive a full relief for the first 6 months they sit empty before reverting to the same 10% discount. A listed building receives a continuous 100% relief for the whole time it is unoccupied. Therefore, some concerns remain that businesses other than retail, hospitality, leisure and aviation not physically occupying are left in the dark with only limited relief available, as outlined above. 

Business Growth Accelerator Relief

This relief (also known as New and Improved Properties Relief) is twofold. The first aspect relates to new build premises. Currently, rates are not payable on new build properties until they are occupied. Following taking occupation, the full relief continues to apply for a further 12 months. From April 1, this relief will extend for an additional 2 years. The result being that a new occupier of a premises is entitled to benefit for 3 years without paying rates, an attractive proposal for businesses considering taking space in new build properties.

Secondly, if improvements or additions are made to the property which result with an increase to the rateable value, the charge will continue to be based on the previous rateable value, notwithstanding completion of the improvement works, for a period of 12 months. As with the first element of this relief, the period will be extended from 12 months to 3 years from 1 April. 

The recent announcements by the Scottish Government on rates will be key as part of business’ slow recovery in a post-pandemic way of life, especially those in the hospitality, retail, leisure and aviation sectors.  There is no doubt questions remain whether more could be done to assist premises of all sectors currently sitting empty and if the existing reliefs go far enough during such unprecedented times. However, opportunities are perhaps presenting themselves with the availability of reliefs for those seeking a fresh start and planning for business as usual in a post-pandemic world. 



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