Further consultation on Scottish business rates reform

In August 2017, 30 recommendations on reforming business rates in Scotland were published after the Barclay Review was completed.  Some of these measures have already been implemented, for example introducing a 12-month delay before rates are increased when an existing property is expanded or improved.  This was welcome news to salons who complained they were unfairly penalised by investing in their premises, only to see their business rates immediately increase, long before they had seen any financial return on their investment.

The latest consultation, which has just closed, is now fine-tuning how the Barclay Review recommendations will be implemented.  One proposal is to change legislation so that the 12-month delay becomes automatic, rather than salon owners having to apply for relief.  

Legislation also needs to change to allow for the introduction of revaluations every 3 years from 2022, rather than every 5 years.  The advantage of more frequent revaluations is that business rates will be based on more realistic property prices which is particularly important in areas where property prices are declining.  The last revaluation took place in 2017, so the next one will take place in 2022 and the following one in 2025 if all goes to plan. 

The most significant recommendation, likely to be introduced in 2022, will be piloting business rate supplements for out-of-town ratepayers or predominantly online ratepayers, with the proceeds going to support ratepayers in town centres.  The pilot will be limited to just three towns and a formal evaluation will take place before any decisions are made on a wider roll-out.  The consultation proposed measures such as a cap on how large the supplement could be, whether to consult with local ratepayers affected and having a say in how the proceeds of the supplement are used. 

Too many salons are paying premium business rates in town centres which are no longer the desirable locations they once were.

Hilary Hall, NHBF chief executive said: “the pilot is the first time that there has been a response at government level to the fact that business rates based on property values are outdated in a fast-growing digital economy.  The NHBF has long called for fundamental reform of business rates, as too many salons are paying premium business rates in town centres which are no longer the desirable locations they once were.”

Link to the Barclay Review:

https://beta.gov.scot/publications/report-barclay-review-non-domestic-rates/

Link to the consultation (now closed):

https://consult.gov.scot/local-government-and-communities/non-domestic-rates/