Funding of local government 2021 to 2022: process overview

Overview of the process to determine the local government finance settlement for 2021 to 2022. The figures used are set out in Finance Circular 5/2021, as agreed by Parliament. The publication relates to general funding, and excludes any additional COVID-19 funding provided over the last year.

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 2021-22, and also took into account rates-relief due to the Covid-19 pandemic.

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

Guaranteed revenue from Non-domestic Rates in 2021-22 - £2.6 billion

Bar chart of guaranteed income from Rates

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.



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