Local government funding 2020-2021: process overview

Overview of the process to determine the Local Government Finance Settlement for 2020 to 2021. The figures used are set out in Finance Circular 2/2020, which was agreed by Parliament prior to the COVID-19 pandemic, and so do not take account of additional COVID-19 funding.

How did we estimate the amount of Non-domestic Rates each council would receive?

The Scottish Fiscal Commission then forecast how much each council would collect from Non-domestic Rates.

Non-domestic Rates are charged on all businesses and other organisations that use properties. Their properties are valued and Rates are collected in proportion to their value. Some properties are exempt from Non-domestic Rates, or pay reduced amounts.

The Commission made assumptions, based on the latest data, about how many more or fewer properties there would be in 2020-21. The amount assumed in the settlement for 2020-21 was £2.8 billion, but this was later revised down because of rates-relief due to the Covid-19 pandemic.

Unlike Council Tax, the level of Non-domestic Rates is set nationally by the Scottish Government.

Bar chart of guaranteed income from Rates, from £2.1 billion in 2010-11 to £2.6 billion in 2018-19

The amount actually collected differs from the forecast, sometimes it’s more, sometimes it’s less. To protect councils from these differences the Scottish Government guarantees the amount they will receive. The Scottish Government pays any shortfall, and keeps any extra collected, and then adjusts next year’s guaranteed amounts accordingly.


Email: gaestatistics@gov.scot

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