Local government finance circular 5/2025: decapitalisation rates for the 2026 revaluation

To: Chief Executives and Directors of Finance of Scottish Local Authorities 
Chief Executive, Convention of Scottish Local Authorities (COSLA)
Scottish Assessors Association

Date: 27 May 2025

Dear Sir/Madam

Non-domestic rates: decapitalisation rates for the 2026 revaluation

1.    Decapitalisation rates are used by the Scottish Assessors when valuing certain non-domestic property using the ‘contractor’s basis’ method of valuation. Ministers have prescribed decapitalisation rates for all revaluations since 1990.

2.    Having considered the evidence available at this time, Scottish Ministers have decided to retain the prescribed standard and lower rates at 4.6% and 2.9% respectively. The Valuation for Rating (Decapitalisation Rate) (Scotland) Regulations 2016 will therefore remain in force.

3.    Draft valuations for non-domestic properties, including those valued by the Assessors on the Contractor’s basis, will be published on 30 November 2025. Final rateable values will take effect from 1 April 2026.

4.    I encourage you to seek pre-agreements with the Assessor on your council’s property valuations, where possible, in advance of 1 April 2026. The Scottish Government no longer supports non-domestic rating public sector proposals and appeals. The legal right of public bodies to make an appeal against their non-domestic property rating valuations remains. However, for all public bodies funded by the Scottish Budget, including councils, the financial incentive of them appealing is removed, with the financial outcome of successful proposals and appeals resulting in a downward redetermination of revenue allocations at a subsequent fiscal event.

Yours sincerely,

Anouk Berthier

Local Government and Analytical Services Division