Business rates have always been a bone of contention for businesses — particularly in the North-east of Scotland where it has often been felt that these are disproportionately high.

The last revaluation took place in 2015, and the new rates came into force in April 2017.

Business rates are based on the revaluation date, and in 2015 the Aberdeen economy was riding high. As such, it was a tough pill to swallow when these rates came into force two years later, after a significant dip in Aberdeen’s fortunes. Current Scottish Assessors Association figures show, for example, Aberdeen's total rateable value to be amongst the highest in Scotland at £577,574,645 for just 9,940 subjects.

In comparison, Edinburgh (£931,124,692) and Glasgow (£983,254,953) have higher values, but also significantly more subjects: 23,256 and 28,147 respectively.

The downturn in the economy since 2015 was not considered to be a “Material Change in Circumstances” which merited a rates reduction.

As a result, there were many appeals, but ultimately there was very little relief for the North-east business community, which simply had to wait it out until the next revaluation.

This week, businesses will start receiving notice of the proposed rateable values which will apply with effect from 1 April, 2023. These are based on the rental levels as at April this year. The notices will set out the extent of the property assessed, and the rental evidence which was taken into account in determining the rateable value. These will then be followed by a final valuation notice on 1 April, 2023.

Rates poundage

That doesn’t tell the whole picture though, as the rateable value is then multiplied by the rates poundage the Scottish ministers set to determine the actual amount to be paid.

The rates poundage is due to be announced on 15 December, and the business sector is keen to avoid any increase in rates as an attempt to balance budget deficits within the Scottish Government.

The recent Autumn Statement in England held the poundage rates at the current levels and the business community south of the border lauded this decision. However, it remains to be seen whether Scotland will take the same approach.

Radical changes?

It is also unlikely that we will see any radical changes to the general principles behind business rates, such as reductions for shops, to enable them to compete more evenly with online retailers who can trade from large warehouses with fewer overheads, and help town centres to flourish.

Many North-east businesses will expect to see their rateable value drop compared to the 2015 revaluation; however, an increase in the poundage rate may eradicate any benefit from a reduced rateable value.

In times where the country’s future requires growth, a rise in business rates is likely to be widely seen as not sending out the right message or support for businesses to invest in the future.

Next step for businesses

The next stage in the process for businesses is to review the draft rateable value notices and consider whether they have been accurately calculated.

Once the notices are finalised in April 2023, businesses have a period of six months to appeal. After the last revaluation, around 75% of businesses paying rates lodged an appeal. This takes time though, and even five years later, a small percentage of these still have to be resolved.

For support on the valuation process and advice on how to lodge a challenge or appeal, please do get in touch.