Local government finance circular 4/2022 - non-domestic rates relief: guidance

This circular provides general information relating to current arrangements for non-domestic rates reliefs in 2022 to 2023. It also provides examples of supporting documentary evidence. The information was compiled with the involvement of officers from COSLA and the IRRV.

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Empty Property Relief

96. The key legislation is sections 24 to 25 of the Local Government (Scotland) Act 1966, the Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 1994, and the Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 2018.

97. Unoccupied property meeting any of the criteria below is not liable for rates:

  • property not comprising one or more buildings or a part of a building;
  • listed buildings;
  • subject of a building preservation order;
  • rateable value (RV) under £1,700;
  • owner in administration (or subject to an administration order);
  • owner is a company or limited liability partnership subject to a winding-up order made under the Insolvency Act 1986 or being wound up voluntarily under that Act;
  • occupation prohibited by law;
  • action taken by or on behalf of the Crown or any public authority with a view to prohibiting occupation or to acquisition (e.g. compulsory purchase order);
  • person entitled to possession only so entitled as a liquidator, as the trustee under a trust deed for creditors or an award of sequestration, or as the executor of a deceased person's estate.

98. For properties prohibited by law from occupation, a rates exemption would be granted where legal action had been taken to prevent its use. However, if legal action had been taken to prevent one particular person or trade from using the property, then it would be unlikely to be exempt unless that person was the owner.

99. From 1 April 2022, Local Authorities may give consideration as to whether specific criteria are present before awarding 100% empty property relief where the ratepayer has entered insolvency, compulsorily or voluntarily, shortly after occupation, and restrict the awarding of the relief on that basis - where properties which are let under a lease agreement, and have become unoccupied on or after 1 April 2022 within a period of 6 months from the date the property first became occupied under the lease agreement; with at least one of three further indicators connected to reduction or mitigation of rates liability also present:

  • the rent charged for the lands and heritages is significantly below the level of the rent which could reasonably have been obtained at the time the lease was entered into, in all the circumstances;
  • payment of the rent is optional in terms of the relevant lease;
  • the purpose of the arrangement is identified in the lease as being for the purpose of mitigating rates liability.

100. Annex B provides examples of supporting documentary evidence that the council may require in order to determine that a property is unoccupied.

101. Unoccupied industrial property is eligible for 100% relief for the first six months since becoming unoccupied and thereafter 10% indefinitely. Other (non-industrial) unoccupied property is eligible for 50% relief for the first three months since becoming unoccupied and thereafter 10% indefinitely. A change of ratepayer does not affect the qualifying time period.

102. This relief is mandatory and 100% funded by the Scottish Government.

103. From 1 April 2020 and for the purpose of determining eligibility, a property is treated as if it had been unoccupied during any period of occupation that ended within six months of when it started.

104. Any unoccupied property that is rateable is, for the purposes of determining charity relief eligibility, treated as if it is being used for the purpose for which it was used when last occupied.[22] It may not however be eligible for Charity Relief unless the proprietor (or the party entitled to occupation) also satisfies the relevant criteria (see Charity Relief section).

105. Part-occupation:[23] if it appears to the council that part of a property is unoccupied but will remain so for a short time only, it may ask the Assessor to apportion the RV between the occupied and unoccupied parts. In that case, the Assessor must apportion accordingly and the following applies. The RV for the whole property is taken for rating purposes to be the apportioned value of the occupied portion plus a percentage of the apportioned value of the unoccupied portion. That percentage is 0% for industrial property empty for up to six months; 90% for industrial property empty for over six months; 50% for non-industrial property empty for up to three months; 90% for non-industrial property empty for over three months. The Valuation Roll itself is not altered, the apportioned figures being supplied to the council by the Assessor on request.

106. Part-occupation is generally considered when a ratepayer can clearly evidence that part of the property is empty. The start date for relief is the later of the date part occupation commenced or the start of the financial year in which the council's request was made to the Assessor. The end date is the earliest of: the end of the part occupation; the end of the financial year in which the council's request was made to the Assessor; a further apportionment being made; or the property become fully unoccupied. The council may extend the duration into the following financial year.

107. Plant and machinery can be kept on property without that being classed as occupation.[24]

108. Shooting rights may be considered unoccupied if no commercial shooting/stalking takes place. If there are no buildings on the land this relief is 100%.

109. Empty Property Relief can be regarded as a general measure and is therefore unlikely to require to be awarded as TCA MFA.

110. The Scottish Government has set out a requirement to restrict the use of certain premises and businesses during the COVID-19 emergency period.[25] It is for councils to determine whether a property is occupied or unoccupied based on the existing legislation, and considering whether the threshold as set out in case law for a property to be unoccupied is met under any temporary restriction on certain types of use.[26]



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