Publication - Consultation paper

Non-domestic rates reform: consultation

Published: 25 Jun 2018
Local Government and Communities Directorate
Part of:
Economy, Public sector

Consultation on non-domestic rates reform on the 15 proposed reforms to legislation, as advised by the Barclay review.

22 page PDF

795.3 kB

22 page PDF

795.3 kB

Non-domestic rates reform: consultation
Consultation on Barclay Implementation Measures to Support Growth

22 page PDF

795.3 kB

Consultation on Barclay Implementation
Measures to Support Growth

Barclay recommendation 1

A Business Growth Accelerator – to boost business growth, a 12 month delay should be introduced before rates are increased when an existing property is expanded or improved and also before rates apply to a new build property.

15.Secondary legislation has delivered these policies with effect from 1 April 2018 and similar secondary legislation will be laid in all future years to which this policy applies.

16.To simplify the current application based relief, an alternative would be to create a time delay in primary legislation to ensure that increases in rateable value due to a new property being built and occupied or improvements to an existing property do not take effect for a set period. To allow future flexibility, this could include a power to enable Ministers to vary the time delay by Regulations (either increasing or decreasing the current 12 months delay period depending on prevailing circumstances and affordability). This would also have the benefit of removing the need for ratepayers to apply for relief, ensure consistency in the approach across Scotland and reduce administration of relief applications by Councils.

17.Currently, secondary legislation has delivered these policies with effect from 1 April 2018 and similar secondary legislation will be laid in all future years to which this policy applies. However, the legislation is complex and primary legislation could simplify this.

18.In addition to recommendation 1, the Scottish Government went beyond Barclay and introduced a further measure which, from 1 April 2018, will see new-build properties receive 100% relief until first occupied.

19.To remove the need for the current application based relief for new build unoccupied property primary legislation could alternatively adjust the duties of the Assessor in relation to entries in the valuation roll.This would ensure a new build property would be entered on the roll only on the date of occupation.Again, this would simplify the process for ratepayers by removing the need for applications.

20. Alternatively annual secondary legislation could have the same effect.

Question 1 – What are your views on how the growth accelerator and new unoccupied build should be treated in legislation?

Barclay recommendation 2

There should be three yearly revaluations from 2022 with valuations based on market conditions on a date one year prior (the 'Tone date').

21.In order to reflect changes that occur over time, property valuations for rates are reassessed at regular intervals as part of a process known as Revaluation. At each revaluation, the Assessors have to determine the rateable value of each property at a fixed point in time, known as the Tone date. Currently legislation sets Non-Domestic Rates revaluations at five yearly intervals with the Tone date two years prior. We will legislate to change the revaluation cycle to allow three yearly revaluations with a one year Tone date from 2022 onwards. Barclay was clear that more frequent revaluations ahead of 2022 was not possible.

22.More frequent revaluations mean the timetable for dealing with the resulting appeals is reduced by two years. As such, the Implementation Advisory Group advise that delivery of this recommendation is heavily reliant on reforms to the appeals system (Recommendation 19) to ensure appeals are dealt with timeously and the vast majority are cleared before the start of the next revaluation cycle.

Question 2 – Do you have any comments on three yearly revaluations?

Barclay recommendations 3, 4 and 5 (a) do not require primary legislation and are outwith the scope of this consultation.

Recommendation 3 is for the large business supplement to be reduced when affordable, recommendation 4 is for a new day nursery relief, which was introduced in April 2018 and 5 a) is for an expansion of Fresh Start, which came into force on April 2018.

Barclay recommendation 5 b)

A new power to enable councils to impose an additional levy on rates in certain circumstances.

23.Barclay suggested a new discretionary power for councils to apply modest rates supplements in certain circumstances from 2020 for out-of-town ratepayers or predominantly online ratepayers. The proceeds would be used to support ratepayersin town centres. This should be a pilot scheme (involving no more than three towns) and must be subject to a formal evaluation to determine whether those pilots were successful prior to any further rollout.

24. The Implementation Advisory Group acknowledges that the Scottish Government has already committed to implement these pilots, but recommend that this measure include a number of safeguards.

25.It was suggested that those safeguards could include one or more of the following:

a) A cap on the level of supplement set in legislation determined by Scottish Ministers. As an example, this could be linked to the prevailing poundage rate ( e.g. no more than a set percentage of the annual poundage rate).

b) A requirement for Ministerial and/ or Parliamentary approval for each scheme. If parliamentary scrutiny is considered appropriate this could be achieved by laying of Regulations for each pilot scheme.

c) A requirement for the local Council to consult on the scheme, including with local ratepayers and to publish analysis of this consultation prior to any approach being made to the Scottish Government to take part in a pilot scheme.

d) A requirement for local ratepayers to have a say on how proceeds from the supplement are spent (similar to the Business Improvement District model).

The Implementation Advisory Group also strongly supported Barclay's view that this should only be a pilot scheme and must be formally assessed prior to any wider rollout.

Question 3 – From 2020 a small number of pilot councils will have a new power to increase rates paid by out of town or predominantly online businesses.

a) Do you agree or disagree with putting in place safeguards?

b) Please explain your response to (a) including what the safeguards should be if you agree they are required.

Question 4 - Do you have any comments on the criteria and process which should be used to assess the pilot scheme(s)?

Barclay recommendation 6 is for a review of plant and machinery valuations. This has commenced by a separate process reviewing hydro valuations.This review is currently underway and is outwith the scope of this consultation.

Barclay recommendation 7 is for an review of the Small Business Bonus Scheme ( SBBS). The Scottish Government are committed to implementing this recommendation, which will commence in 2018, and findings will be available in time to inform the 2022 revaluation. This recommendation is subject to separate process and is outwith the scope of this consultation.