Business Rates Set to Change
15 February 2010
Increases in rateable values (RVs) for Scottish non-domestic properties were announced last week. The Scottish Government also revealed changes to the relief scheme, most notably the removal of transitional relief.
The RVs, which are adjusted every five years, will affect business rates from April 1st. From initial analysis it appears that value changes have fluctuated significantly across the country and property sector. For example, RVs for industrial property in West Lothian have increased by c. 23%, public houses in Aberdeen by c. 40%, supermarkets in Glasgow by up to 60% and offices in Edinburgh and Glasgow by c.10% and c.15% respectively.
Rate-payers already struggling in the face of the recession have bemoaned the revaluation mainly due to its timing, as the RVs have been calculated using property rental values as they stood in April 2008, well before the downturn and just after the property boom. The timetable is set by current legislation which Assessors are obliged to comply with.
Tim Bunker, rating partner at Ryden said: “The Government has stated that 60% of companies will be better off, however this is hiding the fact that some enormous increases have occurred. For instance, Tesco at Bridge of Don has seen a rates increase from £746,900 to £1 million and despite the decrease in tourist numbers due to the recession, the rates bill for the Balmoral Hotel in Edinburgh has increased from £606,250 to £736,920.”
Further examples of changes in RVs
Rate Payer |
2005 RV |
2010 RV |
% change |
Edinburgh Royal Infirmary, Little France Crescent, Old Dalkeith Road, Edinburgh |
£4,600,000 |
£5,700,000 |
23.91 |
Jenners (House of Fraser), Princes Street, Edinburgh |
£1,307,000 |
£1,742,000 |
33.28 |
Royal Bank of Scotland, Gogarbank, Edinburgh |
£6,550,000 |
£6,200,000 |
-5.34 |
Crystal Rig Wind Farm, East Lothian |
£681,250 |
£1,500,000 |
120.18 |
Stobo Castle Health Spa, Peeblesshire |
£407,500 |
£540,000 |
25.50 |
120 Bothwell Street, Glasgow |
£1,090,000 |
£1,250,000 |
12.80 |
John Lewis, Buchanan Street, Glasgow |
£2,000,000 |
£2,100,000 |
5.00 |
Royal Bank of Scotland, 1 Albyn Place, Aberdeen |
£230,000 |
£380,000 |
65.22 |
Asda, Garthdee Road, Aberdeen |
£2,280,000 |
£2,890,000 |
26.75 |
West Pitkerro Industrial Estate, Dundee |
£475,100 |
£549,000 |
13.47 |
Highland Council HQ, Glenurquhart Road, Inverness |
£700,000 |
£775,000 |
10.71 |
Business rates – which raise around £2.57billion for the Government - fund local authority services but the business community has called into question whether it should meet the burden or whether some other form of taxation should be put in place.
How are rates bills calculated? The process is complex and is dependent on an analysis of property rents to arrive at the rateable value; the value is then multiplied by the Uniform Business Rate (UBR), which was set by the Scottish Government in November 2009 at 40.7p (previously 48.1p) for properties with a rateable value below £29,000 or 41.4p (previously 48.5p) for larger premises.
Along with the new RVs, the Government announced that no transitional relief would be applied at this Revaluation. In response to this Mr Bunker commented: “It is strange that at a time when transitional relief would have probably been at its most helpful for those seeing significant increases and ratepayers already struggling in the face of the recession, that it has been removed. The Government has publicised the fact that the reduction in the UBR will itself cushion the increases, but this is the same UBR as applied in England, and they will have a transitional relief scheme. Scottish business will suffer this difference.”
Mr Bunker adds: “A property’s rateable value is the only part of their rates bills that ratepayers can influence and attempt to change. Appeals can be lodged within six months of being issued with a valuation notice and no later than 30 September. Specialist rating advisers can help to appeal and advise on potential savings whether rates bills have gone up or down- even if a value decreases it may not be sufficient.”
