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Scotland fears ‘multi-million-pound’ rates increase

Published:  04 September, 2023

UKHospitality Scotland is urging the first minister to address the multi-million-pound increase in business rates that is set to hamper Scottish hospitality next spring.

The news follows reports from the Scottish Fiscal Commission, which is projecting a 5.4% uplift in business rates in April 2024 – from 49.8% to 52.5%. 

However, UKHospitality Scotland executive director Leon Thompson has outlined the need for a commitment from the first minister that rates will not rise with inflation, as predicted, to avoid heaping further cost pressures on already strapped venues.

“After an extremely challenging year for Scottish hospitality with the chaos of the Deposit Return Scheme and ever-worsening cost of doing business crisis, the first minister has an invaluable opportunity to set out a positive vision for the sector,” said UKHospitality Scotland executive director Leon Thompson.

The government has also been criticised for not aligning its rates with England and Wales, which saw businesses benefit from a relief on rates by up to 75% following the pandemic. 

Thompson added: “With the vast majority of rates increasing last year and no offer of financial support, unlike in England and Wales, the business rates burden leaves many in a perilous situation and it needs to be addressed.

“Making such a commitment, alongside taking up recommendations to review non-domestic rates, would be a clear show of support to the sector.

“After years of wasted time and resources preparing for the Deposit Return Scheme, the introduction of a tourist tax and new charges on single-use cups, the sector would be grateful for this year’s legislative agenda to simply not include plans that are harmful to hospitality.

“The First Minister spoke of a ‘reset moment’ with businesses upon his appointment this year and, while there has been a shift, this can be cemented in his upcoming Programme for government with clear action to address the enduring issue of business rates.”

In response, the Scottish Beer & Pub Association (SBPA) has proposed a new hospitality-specific business rate set at 35p in the pound.

“The Programme for government allows the Scottish government to show clear support for the sector by committing to investigating a new deal on business rates,” said SBPA chief executive, Emma McClarkin.

Meanwhile, public finance minister Tom Arthur MSP, said: “The Scottish government has set out a strong non-domestic rates package in 2023-24, including the most generous rates relief for small businesses anywhere in the UK, taking over 100,000 properties out of rates altogether.

“As part of this, it is estimated that around half of properties in the retail, hospitality and leisure sectors in Scotland will pay no rates this year.

“The first minister has accepted the New Deal for Business Group’s progress and recommendations report in full, including those on non-domestic rates, and a plan to implement these recommendations is currently being prepared by the group.

“We will continue to do all we can to support businesses in response to the cost of living crisis, including pressing the UK government for support with high energy bills and changes to VAT.”