Decapitalisation Rate for the 2026 Revaluation: business regulatory impact assessment

Executive summary

Issue and why it needs to be addressed

The Scottish Government will continue to prescribe two decapitalisation rates to be used for the contractor’s basis method of valuation at the 2026 revaluation, and the current groupings of properties in each rate will be maintained.

Intended outcomes

The decapitalisation rates will remain at 4.6% (standard rate) and 2.9% (lower rate).

Options

The Scottish Government gave consideration to the following options:

• Do nothing
• Decrease the rates
• Increase the rates
• Do not prescribe statutory decapitalisation rates
• Change the number of categories with different rates and/or their make-up

Sectors affected

The sectors affected will be those non-domestic properties which are valued under the Contractor’s method.

Engagement completed, ongoing and planned

The Scottish Government consulted on decapitalisation rates in advance of the 2017 and 2023 revaluations, though not on what the rates themselves should be. The Scottish Government did not run a consultation in advance of the 2026 revaluation given the consistency of views, and absence of strong views, on the above matters in previous consultations.

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

The anticipated effect will be on the sectors the rateable values of the properties which are valued under the Contractor’s method, which will be higher than if the rates had been set higher, and lower than if the rates had been set lower.

Enforcement/ compliance

Scottish Assessors are responsible for the valuation of non-domestic property and are independent of local and central government.

Recommendations/implementation plans

The decapitalisation rates will remain at 4.6% (standard rate) and 2.9% (lower rate). These rates are already set out in secondary legislation.

Evaluation and monitoring of implementation/ review of BRIA

The policy around decapitalisation rates is considered at each revaluation. Revaluations take place every three years.