Scottish budget – non-domestic rates and what it means for businesses

Scottish Parliament has made its announcement on Non-Domestic Rates, confirming the Government’s intention to freeze the basic property rate.

This confirms Scotland as having the lowest poundage in the UK, with the government forecasting it will save business tax ratepayers £308 million compared to an inflationary increase.

Deputy First Minister John Swinney also announced his intention to reform and extend the Small Business Bonus Scheme, aiming to improve the progressivity of the relief whilst “ensuring that it remains the most generous small business relief in the United Kingdom.” This is estimated to take a further 100,000 properties out of business rates obligations altogether.

Swinney alluded to the fact that Non-Domestic Rates will be used to “assist the transition to Net Zero” as he explores incentivised investment in renewables through the introduction of new prescribed plant and machinery exemptions for onsite renewable energy generation and storage. “Investment, be it in the low carbon economy or more broadly, is central to building a strong economy and the fairer and more equal country in which we all want to live.” he added.

You can see the full announcement here:

Or a quick summary here:

  • The Basic Property Rate (poundage) will be frozen at 49.8p.
  • The threshold from which the Higher Property Rate will apply will increase from £95,000 to £100,000
  • A Revaluation Transitional Relief will be introduced to cap increases in rates liabilities due to revaluation. The caps (in cash terms) in 2023-24 will be 12.5% for small properties, 25% for medium-sized properties and 37.5% for large properties, rising in subsequent years. Further detail is set out in the table below.
  • Small Business Bonus Scheme relief will be reformed. 100% SBBS relief will continue to be available for properties with a rateable value up to £12,000. The upper rateable value threshold for individual properties to qualify for SBBS relief will be extended from £18,000 to £20,000. Relief will taper from 100% to 25% for properties with RVs between £12,001 and £15,000; and from 25% to 0% for properties with RVs between £15,001 to £20,000. The cumulative rules including the RV threshold of £35,000 will remain. Car parks, car spaces, advertisements and betting shops will be excluded from eligibility for SBBS from 1 April 2023.
  • A Small Business Transitional Relief will be introduced for those losing or seeing a reduction in Small Business Bonus Scheme Relief or Rural Rates Relief (including due to SBBS exclusions) on 1 April 2023. The maximum increase in the rates liability relative to 31 March 2023 will be capped at £600 in 2023-24, rising to £1,200 in 2024-25 and £1,800 in 2025-26.
  • Prescribed plant and machinery used for onsite renewable energy generation and storage will be exempt from rating from 1 April 2023 to 31 March 2025.
  • Properties in receipt of Business Growth Accelerator relief on 31 March 2023 will continue to be eligible for an equivalent percentage of relief on the new rateable value for the remaining duration of the relief.
  • Properties in receipt of Fresh Start relief on 31 March 2023 will continue to receive relief for the remaining duration of the relief, regardless of whether the new rateable value is above the qualifying threshold. From 1 April 2023, the rateable value to which properties qualify for Fresh Start relief will increase from £95,000 to £100,000.
  • Enterprise Areas relief will be extended by one year to 31 March 2024.
  • Empty Property Relief will be devolved to local authorities on 1 April 2023 with a concurrent transfer to local government.