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A help guide to Scotland’s non-domestic rates / business rates

Blog guide to Scotlands non domestic rates business rates hero

Business rates in Scotland has recently been reviewed by the Scottish Government. With change in revaluation timescales as well as appeal processes our head of Rating in Scotland Louise Daly provides a guide on what you need to know if your business uses a commercial property.

  
Do I need to pay business rates?
Business rates are charged on most commercial properties such as shops, offices, hotels, pubs, warehouses and factories, but also holiday homes that you rent out and other rental properties. If the premises are used for purposes which are not domestic it is likely to be rateable, although there are a few exemptions here

What are business rates?
Business rates are a tax paid on the occupation of commercial property to fund local council services. They typically equate to approximately 50 per cent of annual rent and represent one of the biggest overheads for businesses. They can substantially impact on profitability.

Business rates are based on a specific value, called a rateable value. All commercial properties are valued on the same day for consistency and fairness, with the last revaluation in 2017 using a “tone” date (valuation date) of 1 April 2015. Following the Scottish Government’s review of the rating system in 2017, significant changes to the current system are to be implemented. In 2023 all commercial properties in Scotland will be subject to a revaluation with the tone date being 1 April 2022 and going forward the revaluation cycle will be shortened from five years to three. 

Who are the Scottish Assessors?
The Scottish Assessors are responsible for the valuation of all non-domestic properties for local taxation purposes within their respective valuation areas. Each of the 32 local council areas within Scotland are responsible for appointing an assessor who must maintain a Valuation Roll. However, there are only 14 appointed assessors as ten council areas consist of Valuation Joint Boards. 

The role of the assessor is different to those of many other local government officers as their independence ensures that decisions are made on considerations of value, without added political pressures. 

What is the rateable value of a property?
The rateable value (RV) is the value assigned to non-domestic premises by the assessors. The RV is based on a property’s annual market rent, size and usage. 

The RV is a representation of the annual rental value of a property and assumes the property is let on a full repairing and insuring basis (FRI). The assessors place these values into the Valuation Roll where the valuation of your property and others can be found. 

The billing authorities within the local council then use the RVs to calculate rates liability and issues bills to businesses within their region.
You can access your rateable values on the website: www.saa.gov.uk

How are business rates calculated?
Business rates are calculated in a two-step process. Firstly, the assessor is tasked with estimating the annual rent, rateable value, the property is likely to let for at the fixed tone date.

The RV is then used to create the liability by multiplying it by the uniform business rates/poundage which is set every year by the Scottish Government. Below you will find the poundage set for financial year 2021/2022 and 2022/2023

Financial year

Small

(RV ≤ £51,000)

Intermediate

(RV of £51,001 to £95,000)

Large

(≥ £95,001)

2021/2022

49p

50.3p

51.6p

2022/2023

49.8p

51.1p

52.4p

In order to calculate your estimated business rates for the year ahead, you need to multiply the poundage rate by your business’ RV.

The Scottish Government business rates calculator can be found here.

Your bill will be reduced if your property is eligible for business rates relief.

The most up to date information on relief which you may be eligible for can be found here.

Do I have to pay business rates if my property is empty?
Under the Empty Property Relief Scheme, commercial properties i.e. shops and offices only pay 50 per cent business rates for the first three months from when the property becomes empty, 90 per cent  of the rates is payable for any remaining vacant period. Empty industrial properties enjoy 100 per cent relief for the first six months and then revert to the 90 per cent payable in line with other commercial asset classes.

Blog guide to Scotlands non domestic rates business rates table 1

Empty property relief is applied through application to your local billing authority. A property must have been occupied for six months or more before becoming empty to qualify for empty property relief. If the property was occupied for a period less than 6 months before an empty property relief application is made, then only 10% relief will be applied.  

100% relief is applicable for the entire duration a property is unoccupied, if:

  • It is a listed building

  • it has a rateable value under £1,700

  • it is owned by a trustee for sequestration, liquidation or executors

  • the company who owns it has been wound up

  • by law, the property cannot be occupied

  • it is under a compulsory purchase order

  • there are no buildings i.e. empty ground.

How can I reduce the business rates that I am paying?
Under the current rating system in Scotland a ratepayer has the right to submit an appeal to challenge the rateable value set by the assessor’s office,  typically, this is six months from:

  • a revaluation 

  • when the value was set and the assessor issues a new valuation notice or

  • when the proprietor, tenant or occupier took an interest in the property.


A ratepayer also has a right to challenge the value within a financial year if they feel the enjoyment of the property has been affected by a material change of circumstances ie roadworks, scaffolding, redevelopment etc. 

Once an appeal has been lodged, evidence supporting the challenge must be submitted within a strict legislative timescale and discussions must take place between the ratepayer (or their representative) and the assessor’s office.

However, from 1st April 2023 the appeal window reduces from six months to four months and the current one stage appeal process changes to a two stage proposal and appeal system, as below:

  • Proposal stage - factual information regarding the property has to be agreed and all evidence supporting a challenge including an alternative valuation and supporting rental evidence has to be submitted. Should the assessors not agree with the proposal submitted there is the right to appeal to a Scottish Tribunal hearing.

  • Appeal stage - the appellant (or their representative) can appeal the assessors decision against a proposal and will have the opportunity to present their case to an independent Scottish Tribunal. A decision is then issued by the Tribunal 28 days after proceedings.

The business rates appeals procedure is technical and can be complicated to navigate. Our experienced team of experts can help you with an appeal or any other rating queries that you have.

View our business rates services

Do I have to provide the assessors with information? 
The assessors can ask you for information to help them value your property, these are issued as a request called an Assessors Information Notice. You will be liable to pay a fine should you fail to provide the requested information within the following timescales: 

Blog guide to Scotlands non domestic rates business rates table 2

  • It is necessary to respond to all Billing Authority requests for information within 21 days or any party could be fined £370

  • It is necessary to notify the council of a change in occupier of a property within 42 days or there will be fines of £370.

If you believe that you have been issued with a fine in error, this can be appealed within 28 days of the civil penalty notice being served. 

About the author
Louise Daly has more than a decade of experience specialising in business rates in Scotland, and leads Colliers’ Scottish Rating team. She has worked with international organisations to lower their liabilities and ensure that businesses are able to operate profitably. She has experience of representing occupiers at Valuation Appeal Committee hearings. Louise is a member of several prominent ratepayers’ forums and regularly liaises with the Scottish Assessors Association in respect of reforms to the Scottish rating system.

To contact Louise, email louise.daly@colliers.com


Related Experts

Louise Daly

Director

Rating

Glasgow

Louise's role within the Rating Department involves dealing with a large number of appeals on behalf of various local and national clients.

 

Louise has been involved in complex negotiations for a diverse portfolio of properties across the whole of Scotland in order to secure reductions in Rateable Value for clients.


Louise is also involved in Commercial Lease Consultancy comprising mostly of rent reviews, lease renewals and lease re-gears. Working for a number of national clients on their Scottish property porfolios.

View expert