SRC: Scots firms to pay £55 million more in rates than English counterparts this year

Firms occupying larger premises in Scotland are set to pay £54.7 million more than their equivalent-sized counterparts down south in the coming year, from 1 April.

The figures have prompted the Scottish Retail Consortium to reiterate its call for rates parity with England and for the introduction of a new ‘Poundage Rate Lock', so that Scots retailers are never again charged more in rates than counterparts down south.

In response to a written parliamentary question from North East Scotland MSP Michael Marra (below), Scottish Ministers have confirmed that the Higher Property Rate differential between Scotland and England will be 1.3p in the pound, costing Scots ratepayers an extra £54.7 million in 2025-26.

Shops will account for £9.1 million of this surcharge, with hotels £2.5 million, offices £6.4 million, and factories £9.3 million. Pubs, cinemas and caravan parks are also affected.

The Higher Property Rate is liable on commercial properties with a rateable value of £100,000. There are 11,360 such premises. It is a slab tax and so the higher tax rate applies to each pound of a property's rateable value.

This surcharge was described as “damaging perceptions” of Scotland's competitiveness by the Barclay Rates Review, which called for parity with England to be restored by Spring 2020, some five years ago.

Despite some welcome decisions in the Scottish Budget including a freeze in the Basic Property Rate, the rates burden remains onerous and at a 26-year high. Meanwhile smaller stores in Scotland are missing out on the temporary rates relief being made available to counterparts in Wales and England.

David Lonsdale, Director of the Scottish Retail Consortium, said:

“There is a pressing need to lift private sector investment here in Scotland yet firms liable for the Higher Property Rate continue to pay more than their counterparts in England, to the tune of £54.7 million annually.

“Shops account for £9.1 million of this, making it even more expensive to operate a store on our high streets and retail destinations at a time when retail sales and footfall are at best flatlining.

“We're baffled as to why thousands of stores and other businesses operating here in Scotland are thought to be better placed to fork out more in rates than similar sized premises down south. This Scotland-only surcharge increasingly sticks out like a sore thumb. Ministers must stand by their pledge to restore parity with England and commit to a new ambition, a Poundage Rate Lock, so that Scots retailers are never again charged more than their counterparts down south.”

ENDS

Note: SCOTTISH PARLIAMENT WRITTEN ANSWER

7 January 2025

Michael Marra (North East Scotland) (Scottish Labour Party): To ask the Scottish Government, in light of the Scottish National Party manifesto commitment, what the cost would be in 2025-26 of bringing the Higher Property Rate into line with that in England, broken down by industry sector. S6W-32778

Ivan McKee: In England, the standard multiplier in 2025-2026 is being uprated to 55.5p, from 54.6p in 2024-2025. In Scotland, the proposed Higher Property Rate for 2025-2026 is 56.8p, increasing from 55.9p in 2024-2025.

Table 1 shows the estimated cost of setting the Higher Property Rate at 55.5p, compared to 56.8p, broken down by property class. The Scottish Government does not hold property-level data on industry sectors. Property class is a classification used by Scottish Assessors to describe the type of property, and does not necessarily accurately reflect the use of a property. Figures are rounded to the nearest 100,000, and may not sum due to rounding.