Non-Domestic Rates (Coronavirus) (Scotland) Bill
Overview
Non-domestic rates, also known as Business Rates, are a form of property tax which help pay for local council services. The amount of tax that is paid is based on the ‘rateable value’ of the property. The ‘rateable value’ of a property is based on comparable rental values a few years before the valuation is taking place. Rateable values are reviewed every few years at a ‘revaluation’. The next revaluation will take place in 2023 and will be based on rental values in 2022.
The Bill states that any potential effect of coronavirus cannot be considered when calculating a property’s ‘net annual value’ and/or ‘rateable value’, in the current valuation roll (created in 2017). The ‘net annual value’ of a property is based on how much a person would pay in rent for the property per year. The Bill states that this covers any matters arising from coronavirus from 2 April 2020 onwards.
Non-Domestic Rates (Coronavirus) (Scotland) Bill as introduced (251KB, pdf) posted 14 December 2021
The Bill was passed on 21 June 2022 and became an Act on 28 July 2022
Contents
Overview
Non-domestic rates, also known as Business Rates, are a form of property tax which help pay for local council services. The amount of tax that is paid is based on the ‘rateable value’ of the property. The ‘rateable value’ of a property is based on comparable rental values a few years before the valuation is taking place. Rateable values are reviewed every few years at a ‘revaluation’. The next revaluation will take place in 2023 and will be based on rental values in 2022.
The Bill states that any potential effect of coronavirus cannot be considered when calculating a property’s ‘net annual value’ and/or ‘rateable value’, in the current valuation roll (created in 2017). The ‘net annual value’ of a property is based on how much a person would pay in rent for the property per year. The Bill states that this covers any matters arising from coronavirus from 2 April 2020 onwards.
There is an exception to this relating to the physical state of a property. For example, if the property has suffered physical damage because it has not been used during the pandemic.
Read more about this in the explanatory notes (115KB, pdf) posted 14 December 2021
Why the Bill was created
The Scottish Government believes that market-wide economic changes to rateable values, including from COVID-19, should be only considered at revaluation. This Bill reflects this and would ensure fairness to all ratepayers.
The Bill has been created in response to a spike in non-domestic property appeals since the start of the coronavirus pandemic. It expands on the policy put in place by The Valuation and Rating (Coronavirus) (Scotland) Order 2021 (S.S.I. 2021/445). This came into force on 1 December 2021. It meant that, in calculating the rateable value of properties in the 2017 valuation roll, any matter caused by COVID-19 arising on or after 1 April 2021 could not be considered. The Bill covers the period back to 2 April 2020 and also covers net annual value, in addition to rateable value.
The income from non-domestic rates is redistributed across councils and is a significant source of their funding. This income is guaranteed by the Scottish Government. This means, if these appeals were successful, there could be a lot less money for the Scottish Government.
Read more about this in the policy memorandum (156KB, pdf) posted 14 December 2021