So, what are Non- domestic rates?

Non-domestic rates are a tax based on property which is levied to help pay for the range of services that councils deliver (e.g. education, social care, waste management, local roads management, etc).

The amount that each ratepayer will pay depends - in the first instance - on the determined value of their property.

Why has there been a review of Non-domestic rates?

A review of the ‘Rateable Value of firms’ was conducted earlier this year – the first such review in seven years. Many companies (particularly those in the Leisure and Hospitality sector), found that their Rateable Values had shot up. In some cases, annual rates bills had increased by 400%. This is a hot topic at present that continues to affect many of our clients within this sector.

Last year, Kenneth Barclay was commissioned to chair a review into the non-domestic rates system in Scotland. The intention of this review was to better support business growth, long term investment and to reflect the changing marketplace. The review has made the following recommendations:

• An increase in the frequency of revaluations to every three years from 2022.
• Targeted reductions in bills to help retain shops in town centres.
• A cut in the supplementary charge for large business premises, in line with England.
• A legal duty on businesses to provide information for assessors.
• An extended 12-month period of rates relief for businesses investing in expansion.

What are the issues arising from the review?

The British Hospitality Association (BHA), Scottish Licensed Trade Association (SLTA) and Scottish Tourism Alliance released a joint response stating that while the review group acknowledged the case made by BHA that the system of valuing hospitality and licensed businesses is flawed and unfair, it also acknowledged that there was no system of valuation that was likely to be met with the universal approval of all businesses in such a diverse sector. It is therefore likely that this will remain to be a contentious issue for our clients / Hospitality and Leisure sector at large.  

It has also been suggested that Scottish Assessors engage with the industry, its trade bodies and advisers to discuss and agree a future valuation framework which is acceptable to and understood by the industry.

Any organisations effected by the rates increase can make an appeal through their local assessor and for properties in the hospitality sector, a transitional relief scheme is available for one year only, but not automatic and subject to an application – more information can be found online at https://www.gov.uk/ or from your local City Council.

The BHA and the other trade organisations said they would continue to make this case and the team here at Johnston Carmichael watch with interest to see how the Scottish Government will respond to the recommendations.