Welcome to Graham + Sibbald’s latest Rating Newsletter of 2019, providing an update on Rating appeals and financial changes affecting commercial ratepayers.
Business Rates (also known as Non-Domestic Rates) are a tax on non-domestic properties to help pay for local Council Services.
Each year the amount you pay in Business Rates will be increased by inflation. The current revaluation took place as from 1st April 2017 and the new rateable values will remain in effect until 31st March 2022 unless subject to modification under appeal.
Apart from Revaluation Appeal there are other opportunities to lodge an appeal against as assessment as follows;
- If you have a new proprietor, tenant or occupier
- If you have carried out any physical alternation to your property which may have resulted in a new Valuation Notice being issued
- If you consider your business as being adversely affected by external circumstances such as new business competition and/or physical or economic changes in your location
There are limited timescales for appeals on the above and we can provide further information.
Our Rating Services
- Initial meeting with client and appeal recmmendations
- Checking rates invoices and full rates bill audit
- Full appeal process
- Advising on vacant property rates relief
- Advising on rating procedures and legislation
- Water and sewerage charges review
The Graham + Sibbald Rating team benefit from the input and expertise of our Agency, Building Surveying and Planning departments which are vital in assisting with the appeal process.
The amount of tax paid is the rateable value of the property multiplied by the poundage rate, minus and relief to which the property is entitled.
Independent Assessors set the rateable value, which is broadly the amount of annual rent the property would attract on the open market. Non-domestic property values are regularly revalued to reflect prevailing economic circumstances. The most recent revaluation took place in 2017 with the next scheduled for 2022, after which legislation planned for introduction in 2019 will provide for a statutory three-year revaluation cycle.
The main tax rate is the poundage, which is a pence in the pound tax rate set by Scottish Ministers. A supplementary rate is levied on properties with a rateable value over £51,000.
Non-Domestic Business Rates
Rates charges for 2019/2020:
|NDR||2019/20 pence per £||2018/19 pence per £|
|National Business Rate||49.0p||48.0p|
|Properties with rateable value over £51,000||51.6p||50.6p|
|Empty property relief||10%||10%|
The timeline listed below are the future changes proposed over coming years:
1 April 2019
Changes to reliefs:
- New 10 year fibre broadband relief introduced
- Transitional relief extension on hotels, restaurants, public houses (real-terms cap)
No change to reliefs in 2019 and 2020:
- Small Business Bonus Scheme
- Empty property relief (except New Start – replaced by Growth Accelerator)
- Charitable relief
- Hardship relief
- Disability relief
- Enterprise areas relief
- Rural rate relief
- Day nursery relief
- District heating relief
- Renewable energy generation relief
- Hydro relief
Non-Domestic Rates (Scotland) Bill
The Bill was introduced in the Scottish Parliament on 25 March 2019 by the Cabinet Secretary for Finance, Economy and Fair Work. It is a Scottish Government Bill. The Bill and accompanying documents can be found via the link below;
The Bill delivers most of the recommendations of the Barclay Review of non-domestic rates that are considered to require primary legislation. It makes a number of changes in different areas, as outlined further below. The Scottish Government Policy Memorandum accompanying the Bill states (at paragraph 5) that its main policy objectives are to;
- Deliver a non-domestic rates system designed to better support business growth and long-term investment and reflect changing marketplaces;
- Improve ratepayers’ experience of the ratings system and administration of the system; and
- Increase fairness and ensure a level playingfield amongst ratepayers by reforming rate reliefs and tracking down avoidance measures
Overall programme of Rates Reform and the Barclay Review implementation:
- The Scottish Government’s overall programme of Non-Domestic Rates reform, and how the Bill fits into this.
- How the Government has responded to the Barclay Review, in particular on those recommendations it has rejected in full or part.
- Section 2 of the Bill which provided that revaluation of properties subject to non-domestic rates would be carried out every 3 years rather than every 5 years.
- Section 3 of the Bill which (together with section 9) makes provision in relation to new or improved properties. These delay the point at which non-domestic rates are increased because a property has been expanded or improved, or at which as new build property begins to incur liability to non-domestic rates. The underlying aim is to incentivise development and investment in business properties.
- Section 4, which aims to increase the degree to which public parks are subject to non-domestic rates, in recognition of the commercial activities that taken place in some parks (e.g. the running of a cafe).
- Section 5, intended as a measure to address a perceived “loophole” that enables owners of holiday homes to avoid both council tax and non-domestic rates by making it more difficult to enter a home on the valuation roll and therefore valued to rateable value (and, through this, to then claim relief under the small business bonus scheme).
- Sections 6-9, which aim to reduce the current high rate of valuation appeals, which the Scottish Government perceives as speculative. (Increasing the frequency of rating revaluations in section 2 is also seen as a component of this reform).
- Section 10, which removes eligibility to claim charitable relief from non-domestic rates from mainstream independent schools, and section 11 which gives the Scottish Ministers the power to issue guidance to local authorities on the appropriate way to use their powers to grant sports club relief.
- Section 12, which aims to address what the Scottish Government describes as a known tax avoidance tactic concerning unoccupied or under-used properties. This will increase the period a property has to be occupied before vacant rates relief can again be granted.
- Section 13, which will enable councils to initiate debt recovery proceedings for unpaid rates sooner.
- Sections 14, 18, 19 and 22, which together aim to strengthen the power of assessors to obtain the information they need to carry out their role, and sections 15, 16, 17, 20, 21 and 22 which give local authorities increased powers to obtain information from ratepayers, in order to ensure that the information they have is accurate, and to reduce the risk of fraud.
- Part 4 of the Bill, which give the Scottish Ministers the power to make anti-avoidance regulations to prevent ratepayers gaining and advantage from avoidance arrangements that are considered artificial, and sets out definitions of “advantage” and “artificial”.
Non-Domestic Rates (Scotland) Bill receiving Royal assent in advance of 1 April 2020
1 April 2020 – 2022
Next Rating Revaluation
Tone date for 2022 revaluation will be April 2020
Rents/costs obtained in 2020 will form basis for next revaluation as from 1 April 20202
1 April 2021
Barclay Review deadline for the implementation of Nursery Relief Review recommendations
1 April 2022
Planned transfer of Valuation Appeal Committees to Scottish Tribunals
Barclay deadline for the implementation of Small Business Bonus Scheme review recommendations. The Small Business Relief scheme will be subject to review.
1 April 2024
Tone date for 2025 revaluation (commencement of one-year tone date)
1 April 2025
Revaluation (commencement of three-yearly revaluations)
Empty Properties Non-Domestic Rates Discount
If non-domestic (business) properties are unoccupied, the Council can grant;
- 50% relief for a maximum of 3 months
- 10% relief of rates when properties remain empty longer than 3 months
If a property (industrial building) is unoccupied from 1 April 2019 and is an industrial building with no retail element, the Council can grant;
- 100% relief for a maximum of 6 months
- 10% relief for longer than 6 months
Certain categories may be exempt from the 90% property charge. These are;
- Properties prohibited by law from occupation
- Properties which are under compulsory purchase
- Properties with a rateable value of less than £1,700
- Properties which are listed building subject to a preservation order
- Properties where the person entitled to possession is a trust or sequestration, liquidation or executors
Unless you have already notified the Council that your property is unoccupied, they cannot give an exemption. An empty property relief application must be submitted, which Graham + Sibbald can advise.