Changes to Scotland’s non-domestic rates system are once again placing significant pressure on businesses across the Highlands – raising serious questions about whether the current approach is still fit for purpose.
Non-domestic rates, sometimes referred to as business rates, are charged on most commercial properties and are based on their rateable value. These values are now reviewed every three years, and the latest revaluation – due to take effect in April – has resulted in very large increases for many businesses, in some cases with little warning.
In a number of instances, businesses had only just received confirmation that they had successfully appealed their previous rateable value when the new, higher valuations were issued. The impact of the latest revaluation has been felt across all sectors, but hospitality businesses in particular have been hit hard, adding to existing pressures from rising costs, staffing challenges and changes in consumer behaviour.
By contrast, hospitality businesses in England have benefited from more generous and longer-term business rates relief, support which has not been matched in Scotland – leaving many Highland operators at a competitive disadvantage.
What did the Budget change?
In Tuesday’s Scottish Budget, the Government announced a package of rates relief measures intended to ease the immediate impact of the revaluation. These include transitional reliefs that limit how quickly bills can rise, with some support tapering off towards 2029. In general, the measures are more generous for smaller businesses.
While these reliefs have been welcomed, they are widely viewed as limited and temporary. Crucially, they do not address the underlying issue: a revaluation system that can lead to sudden, substantial increases – followed almost immediately by the need for emergency relief.
Given the complexity of the rates system, every business’s situation will be different. The Budget announcements are still being analysed, and it will take time for the full impact on Highland businesses to become clear.
The Chamber strongly encourages any member business that has been adversely affected by the revaluation to get in touch, so we can better understand the scale of the issue and continue to represent your interests.
Colin Marr, CEO of Inverness Chamber of Commerce, said,
“The latest revaluation has put renewed pressure on Inverness and Highland businesses at a time when costs are already exceptionally high. While the relief measures in this year’s Budget do provide some breathing space – particularly for smaller hospitality and retail businesses – they are not a long-term solution.
If a revaluation leads almost immediately to the need for widespread relief, then it is fair to ask whether the system itself is still working. We believe there is a strong case for fundamental reform of non-domestic rates so they better reflect today’s economic realities and support, rather than hinder, business growth.”