Scottish business rates: Nurseries make most appeals but get least reductions
Hard-hit private nurseries have made more appeals against their rates bills than any other businesses but have had little success in getting substantial reductions.
Nursery operators were dealt a double-blow when the Scottish Assessors changed how nurseries’ rateable values were calculated at the 2010 rating revaluation, while the Scottish Government removed transitional relief which would have phased in the increase in business rates.
Nurseries based in large Edwardian and Victorian properties have been worst affected, such as Corner House Nursery in Spylaw Road, Edinburgh which saw its rateable value rise by 256% which meant its business rates jumped by almost £9,000 per year to £13,471. The appeal resulted in a saving of around £1,200 on the nursery’s rates.
MacDonald House, on Whitefriars Crescent, Perth hopes to achieve a substantial reduction when its appeal is heard soon. Its rateable value rose by £17,900, equating to £8,000 more per year in rates.
Private nurseries’ rateable values were previously calculated on a ‘cost’ basis using a valuation which took into account the building’s exterior measurements. Now the Assessors are adopting rents which are calculated according to the net useable space of the nursery. This has increased rateable values and therefore rates bills for private nurseries across Scotland. Local authority nurseries remain on a ‘cost’ basis, so their rateable values have increased but to a much lesser extent.
Ryden has dealt with scores of appeals during this revaluation. The National Day Nurseries Association (NDNA) referred many additional cases to the firm as the body sought to get their members’ hearings to the top of the list for appeals because of the impact the revaluation was having on the sector.
Leading many of the appeals for nurseries is Ryden rating expert Tim Bunker. He said: "It’s a bizarre scenario that nurseries are in. The rises for some are eye-watering and crippling but the values have historically been low because they’ve been calculated on a different basis. Because the increases took effect in a single year they may seem outrageous but the actual rates aren’t high compared with other business classifications."
He explained:"Part of the problem is that many nurseries probably haven’t understood how their bills were calculated and because most of them operate on a January to January financial year, their fees had already been set, so the new rates bills issued in April 2010 came as an untimely shock, particularly with no transitional relief to soften the blow."
Private schools have also been affected by the rise in rateable value because they too had set their fees for the coming year prior to receiving their rates bills but as many are registered charities they receive a form of relief which nurseries don’t get.
Across Scotland, location has also affected appeals levels across various property sectors. Many have been made for properties in outlying areas, such as Livingston, because rents there have dropped, so there is greater disparity between what the Assessors have based their calculations on and today’s rents.
