Scottish budget: Rates increase capped at 2.1 %

Scottish Finance Secretary Derek Mackay has announced in his Scottish budget that the non-domestic poundage rates paid by licensees will see a below-inflation increase of no more than 2.1%.

Mackay says that this means that all small and medium-sized businesses will pay less than in other parts of the UK, however, it doesn’t really address the issues facing licensees.

He also used his Budget speech to announce what the Scottish government has called ‘the most generous package of business rates relief in the UK’, worth more than £750 million in 2019-2.

But Martin Clarkson, of surveyors Gerald Eve, is sceptical about how far reaching this will be. He told DRAM, “In one sense my observation of the transitional relief is that this has been extended is a for the full five years is a positive thing. But drilling down into it and taking into account the inflationary uplift on the annual cap, by the time you get to years, three, four and five of the evaluation cycle, the ratepayers who actually benefit will be few indeed.”

He continued, “The overriding point being the 2017 valuation of hotels, pubs and restaurants is clearly demonstrably flawed.”

Mackay also announced that there’ll be no introduction of an out-of-town levy despite the measure being recommended by the recent Barclay Review of business taxation, but this will be kept “under review”. In its place, a new £50m capital fund will be established with the aim of helping town centres diversify and develop.

Other support for business comes in the shape of £5bn commitment for capital investment to be spent on modernising Scotland’s infrastructure, including a new £50m fund for regenerating run-down high streets.

The Scottish government’s Small Business Bonus Scheme ( You can get business rates relief through the Small Business Bonus Scheme if: the combined rateable value of all your business premises is £35,000 or less. and, the rateable value of individual premises is £18,000 or less) is maintained.

Elsewhere, the government’s external affairs budget – which “supports the promotion of Scotland and its interests at home and abroad” – will increase from £17.2m to £23.9m, while the Highlands and Islands Enterprise sees its budget fall by £10m to £61.

The Scottish Tourism Alliance (STA) welcomed the budget. It said, “Mackay’s announcement of a cap on business rates increases at below inflation levels is hugely welcomed by the STA, as is Mr Mackay’s assurance that the Scottish Government will proceed with the Barclay Review recommendations and will not introduce an out of town supplement on the basis that this is ‘not right or fair’.

“The commitment of upwards of £5 billion over the year to improving Scotland’s infrastructure is good news for Scotland’s tourism industry as much of this will be in improving transport connectivity, an issue that the STA has worked hard to elevate as being a critical issue for our sector.  We also welcome the £50 million Town Centre Fund to support Scotland’s high streets and improve the visitor experience in our destinations.”

 

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