The Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill - Equality Impact Assessment

Background

Non-domestic rates (sometimes mistakenly referred to as “business rates”) (NDR) are a tax based on property in the private, public and charitable sectors, which is charged in order to help pay for the very wide range of services that councils deliver (such as education, social care, waste management, local roads management and cultural services).

The Non-Domestic Rates (Scotland) Act 2020 (“the 2020 Act”) made various changes to the law regarding NDR. One of these changes was intended to devolve Empty Property Relief (EPR) to local authorities as part of an agreement with the Scottish Green Party to increase local fiscal empowerment. A Scottish Government Stage 2 amendment to the Non-Domestic Rates (Scotland) Bill in 2019 was intended to provide for the devolution of EPR and to create a situation whereby owners of unoccupied property would be liable to pay NDR in respect of those properties. Local authorities could reduce those ratepayers’ bills (known as granting ‘relief’) as they considered appropriate using existing powers.

It has recently been identified that the 2020 Act did not have the intended legal effect and there has in fact been no valid legal basis for requiring owners of unoccupied properties to pay NDR on those properties since 1 April 2023. The amount of NDR revenue affected is estimated at around £300-£350m including any interest due (the estimated rates paid on empty properties between April 2023 and September 2025).

The aim of the policy therefore is to deliver the original policy intention and to provide a statutory basis for the established position (liability for rates by the owners of unoccupied properties) with retroactive effect from 1 April 2023. This will give effect to the intended policy of the 2020 Act, making owners of unoccupied property liable for payment of NDR retroactively from that date.

If the Bill is not passed, local authorities who administer NDR will be legally bound to consider stopping charging rates on the owners of unoccupied non-domestic properties and to administering refunds to eligible ratepayers, including any interest due over the period. The cost of refunding the rates paid on unoccupied properties since 1 April 2023 would fall to the Scottish Government, as would the interest accrued on such payments.

Given the scale of the figures involved, there is potential for budget destabilisation across local government and Scottish Government if the Bill is not passed, as the rates paid by owners of occupied properties would have to be refunded if local authorities deem there to be no legal basis to levy rates on unoccupied properties. Scottish Ministers would then need to reduce public spending and/or increase taxation in future years.

Any such destabilisation could impact local and national government services and should this result in a loss or reduction in services, the impact would fall on the wider community.