Licensed hospitality valuation methodology: Gill review - call for evidence
The Independent Gill Review of the valuation methodology of licensed hospitality is seeking relevant information relating to the valuation methodology for licensed hospitality properties. The information provided will inform the Independent Review’s work.
Background
The Programme for Government 2025-26 committed the Scottish Government to commissioning an independent review of the valuation methodology applied to the licensed hospitality sector for the purposes of non-domestic rates. This recognised the ongoing concerns raised by the licensed hospitality sector on the valuation methodology applied to non-domestic property in this sector.
BJ Gill KC has been appointed to chair the Independent Review supported by members with relevant knowledge and expertise. The findings of the Independent Review will be reported by the end of 2026 and will be considered in advance of the 2029 revaluation cycle.
Current valuation methodology for licensed hospitality properties
Non-domestic rates, also called business rates, are a property tax on non-domestic property which helps pay for local council services. The Scottish Government sets non-domestic rates. Councils administer and collect rates.
The valuation of all non-domestic property is a matter for Assessors who are independent of central and local government. Scottish Assessors use different ways to calculate the rateable values of property, depending on the type of property. For most properties, rateable values are based on an estimate of the annual rent that the property could be expected to fetch on the open market. This estimate is derived in accordance with statute and is referred to as the net annual value of the property.
The focus for this review is property types valued under the Scottish Assessors Association’s Hospitality Properties Committee’s Practice Note 1 (Valuation of Licensed Premises) and Practice Note 5 (Valuation of Hotels and Accommodation Subjects) (“licensed hospitality properties”).
The current methodology that Scottish Assessors employ to value licensed hospitality properties such as hotels, pubs and restaurants relies on obtaining turnover information in the first instance. The turnover is then used to inform the valuation – with ratios used to convert turnover information into imputed rental values. This methodology proceeds upon the principle, which is based on the historical analysis of available rental information, that there is a correlation between the hypothetical achievable turnover of a property and the annual rent that the property could be expected to fetch on the open market.
Why the Independent Review has issued this call for evidence
The Independent Review is keen to consider any relevant information and evidence that would help inform its work to consider the methodology used for the valuation of licensed hospitality properties. The call for evidence provides interested stakeholders an opportunity to share in writing any relevant material on the subject matter (published or unpublished) and contribute to the evidence and information base available to the Independent Review.
The success of the Independent Review will depend entirely on the quality of the evidence that it is able to consider, especially reliable evidence of market rental transactions for licensed hospitality properties. The Review implores all stakeholders to engage with this call for evidence and to provide all relevant material that they hold.
The Chair of the Review has put in place procedures to ensure the protection of any confidential material that it receives.
The parameters of the call for evidence are included here for your reference.
Contact
If you have any comments about how this call for evidence has been conducted, please send them to the Scottish Government Secretariat for the Independent Gill Review at ndr@gov.scot or the Chair at bjgill@amadvocates.co.uk.