Many Aberdeen businesses will have been pleased to note a reduction following the announcement in November of the assessors’ draft rateable values (RVs).
And John Swinney’s announcement to freeze the annual rate poundage, the multiplier that is applied to the RV to determine what is payable annually, means many ratepayers will pay less business rates after April 1.
Some bills will be reduced by as much as 60%.
Of course, not everyone will have received the welcome news of a reduction in their business rates.
Many RVs are increasing, most notably and surprisingly in the hospitality sector.
Business rates: Why do we have them, who pays and how are they calculated?
Whatever the outcome, all occupiers should be aware of their ability to appeal the assessors draft RVs by no later than the end of July 2023.
Following a recent overhaul of the Scottish system of assessing non-domestic rates, the process of lodging an appeal has, unfortunately, become more cumbersome.
It now requires the ratepayer, or more likely their property advisor, to present a fully stated case – including all supporting rental evidence – at the point of submitting any appeal.
All occupiers should be aware of their ability to appeal the assessors draft RVs by no later than the end of July 2023.”
Meanwhile, among wide-ranging changes to the system of assessing non-domestic rates, the Scottish Government has devolved the determination of empty property relief to Scotland’s 32 local authorities.
Vacant relief, currently set by Holyrood, affords limited relief to the landlords of empty commercial properties.
It hasn’t been enough to stop some high-profile, good quality buildings from being demolished to avoid annual rates liabilities which can run into hundreds of thousands of pounds.
Listed buildings remain an exception and continue to benefit from 100% relief during the entire period they remain vacant.
Scotland’s local authorities have thus far remained tight-lipped around their proposed vacant relief policies.
Every landlord will, without doubt, be closely watching for the announcement of these sometime before the April 1 devolution deadline.
Aberdeen City Council will be under particular scrutiny.
Commercial property vacancy rates in the Granite City continue to be stubbornly high as a result of the pandemic, a prolonged period of challenging local economic conditions and changing trends in the retail sector.
Balancing the books
The comparatively generous 100% relief currently granted to vacant listed buildings in the city will certainly be under some pressure.
This is because the council will be focused on offsetting a significant reduction in its tax take, following an overall drop in RVs since they were last set at the peak of the market in 2015.
Occupiers will be interested to see whether the council will carry over Fresh Start Relief, or a similar scheme.
Will there be any new support for ‘most challenged’ business sectors?
New tenants currently receive 100% rates relief during the first 12 months of their occupation of any property with a RV of under £95,000 and which has been vacant for more than six months since on or after April 1 2018.
Additional specific relief for those sectors or businesses that remain the most challenged, including retail and hospitality, would be extremely welcome and help with the much-needed regeneration of our city centre.
While the council’s budget remains under pressure, against a backdrop of reduced RVs for many firms, occupiers may have to look towards Holyrood for any additional relief.
Stuart Johnston is a partner and head of commercial, north Scotland, at chartered surveyors DM Hall.
