New business rates relief power for Scottish local authorities

Real Estate Update


From 31 October 2015, Scottish local authorities will have freedom to implement targeted business rates relief schemes within their own areas. The power to do so is introduced by section 140 of the Community Empowerment (Scotland) Act 2015 ("2015 Act"). This adds a new section 3A to the Local Government (Financial Provisions etc.) (Scotland) Act 1962 which states that a "rating authority may, in accordance with a scheme made by it for the purposes of this section, reduce or remit any rate leviable by it in respect of lands and heritages."

The policy memorandum to the Bill which preceded the 2015 Act states that although local authorities will be expected to meet any shortfall resulting from any such schemes through their own budgets, they will not be able to change the poundage rate set nationally, or introduce local supplements.

Local authorities will be able to use the new power to grant rates relief to any type of ratepayer or for any reason, as they see fit. The Scottish Government has commented that they envisage that the new targeted rates relief "could be granted to a sole property, a street, a town centre or a particular type of business or sector."

It remains to be seen how local authorities will use the new power in practice, and how policies develop in each area, but examples of ways in which the new power could be put to good effect would be to encourage investment in specific zones in both urban and rural areas, as well boosting levels of occupation by retailers in locations where demand has been falling. One local authority, anticipating a significant increase in workload once the new power is available, has commented that "once ratepayers discover that there is the possibility of reduction or remission in their rates, we envisage that there will be a sizeable increase in volume and complexity of calls/emails." The implication would appear to be that businesses wishing to explore the possibility of benefiting from the new power should engage with local authorities as early as possible.

The Community Empowerment (Scotland) Act 2015 is available here.

The Stage 1 Report on the Community Empowerment (Scotland) Bill (in which the new power is discussed at part 8) is available here.

If you require any further information please contact the authors.