Retailers’ rates bills to rise £31 million as trade consortium urges Government to abandon 'health tax'

The Scottish Retail Consortium raised concerns over annual rates seeing their biggest increase since 1999.

Shops in Scotland will see their annual business rates bills rise by £31 million from next week.

It follows the decision in the Scottish Government’s Budget to increase the business rate for firms occupying 22,120 medium-sized and larger commercial premises by 6.7 per cent in 2024-25, representing the biggest yearly increase in the business rate since 1999, and almost double the current rate of inflation.

Now the rise has been condemned by the Scottish Retail Consortium, who also warned things could get worse with the new public health settlement that brings back a public health levy on supermarkets.

First Minister Humza Yousaf has been warned about the impact of business rate rises.

David Lonsdale, director of the Scottish Retail Consortium, said: “Scottish retail sales are flatlining, shopper footfall remains below pre-pandemic levels, and the economic outlook is uncertain. Yet despite this, shops in Scotland occupying medium-sized and larger premises are set to fork out a whopping £31 million extra annually in taxation starting from next week as the business rate spirals to a 25-year high.

“Public policy is loading new statutory costs onto stores, many of whom underpin the health and viability of Scotland’s high streets and retail destinations. This increases the cost of maintaining stores and serves to make things even trickier for retailers striving to trade profitably and become more productive. The sheer magnitude of this tax hike is starkly at odds with Scottish Government promises to ‘use business rates to boost business’. Things could get worse if Ministers press ahead with a new business rate public health surtax on larger grocery stores.”

It follows a response to written parliamentary questions, which saw Scottish Ministers reveal that the 4,550 shops liable for the Intermediate and Higher Property Rates will see their rates bills rise by a total of £31.2 million a year.

The 6.7 per cent increase will take the business rate for these premises to a 25-year high. 2,410 of these stores – liable for the Higher Property Rate - will continue to pay a higher business rate than competitors and counterparts down south.

Pubs and restaurants will see their annual rates bills rise by £2 million from 1 April. Meanwhile, hotels, offices, and industrial properties will see increases of £7.8 million, £23.5 million, and £32.4 million respectively.

Separately, the Scottish Budget revealed that Ministers are considering levying a business rate public health surtax on larger grocery stores. If implemented this would likely come on top of the hike in the business rate.

Previously concerns over the income tax gap between Scotland and England was described as a source of "significant concern" in the financial sector, and potentially putting people off working north of the border.

In a wider debate about tax, Chris Hayward, policy chairman at the City of London Corporation, said it was a "risk to Scottish jobs".

Earlier this year, UKHospitality Scotland – which says it represents more than 8,000 venues, claimed hospitality venues in Scotland are set to be up to £110,000 worse off than their English peers, with an average pub at a £15,000 disadvantage, enough to cause such a business to fold, due to unsupportive Scottish Government policy.

A Scottish Government spokesperson said: “In 2024-25, Scotland will have the lowest rates for non-domestic properties with a rateable value up to £51,000 and over 95 per cent of non-domestic properties will be liable for a lower property tax rate, which is more than anywhere else in the UK. Scotland also has the UK’s most generous Small Business Bonus Scheme offering up to 100 per cent relief.“By not following the lead of the UK Government, the measures set out in the 2024/25 Budget ensure that we can provide the funding required for our vital public services like the NHS, schools and emergency services.”