Scottish Government announce changes in business rates policy 

Rates cap follows concerns from business community on taxation 

BUSINESS RATES INCREASES will be capped and specific support will be provided to important parts of the economy, in an change in tax policy announced by finance minister Derek Mackay. 

The first revaluation of non-domestic rates, a devolved property based tax, since 2010 had led to various winners and loser, leading to an outcry for greater intervention in the rules on subsidies. 

Mackay said ‘tailored packages’ would help 9,500 more business - specifically in Aberdeen and Aberdeenshire, benefiting hotels, pubs, restaurants, and cafes, as well as discounts for the hydro-electric sector. 

Scottish Labour and Tory MSPs had called for a change in policy, while the Scottish Greens emphasised calls for greater decentralisation of the rates system. 

Mackay said: “Although councils retain all the revenue from business rates, and have the power to offer rate reductions, it has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation.

“I have listened and decided that we will act nationally to tackle the impact. Hospitality businesses, such as hotels and pubs, across Scotland will see rises capped at no more than 12.5%, recognising the concerns that have been raised with me over the scale of the increases and the valuation methodology which sets them apart from other sectors.”

“If local councils had more control over this vital economic tool they would be better able to respond to local needs”. Andy Wightman MSP

Green MSP Andy Wightman prompted a debate on the rates review at the Scottish Parliament Local Government Committee today (Wednesday 22 February). 

“This last-minute package of measures from Scottish Ministers underlines the need for proper scrutiny of non-domestic rates, which generate almost £3bn a year for council services. If local councils had more control over this vital economic tool they would be better able to respond to local needs, avoiding the kind of uncertainty many small businesses have faced in recent months,” Wightman said. 

Labour welcomed the new policy - but added that there was a risk that the policy would be temporary.

Scottish Labour’s economy spokesperson Jackie Baillie added: “Derek Mackay’s last-ditch U-turn is welcome. For too long the SNP simply refused to listen to firms who were crying out for support.

“But question marks remain over how much this additional relief will cost and how it will be funded. The money is only in place for one year and the danger is that businesses face another cliff edge in 12 months’ time.”

Picture courtesy of Scottish Government

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