By Scott Wright

SCOTTISH retailers have called for ministers to permanently lower the burden of business rates north the Border as the property tax is reinstated after being eased to help firms deal with Covid lockdowns.

Firms across Scotland’s retail, hospitality and leisure sectors were fully exempt from non-domestic rates for the financial year that ended yesterday (March 31) as part of ongoing support provided to business by the Scottish Government throughout the pandemic. From today, firms in those sectors will receive 50 per cent relief from rates, worth up to £27,500 per business, for a further three months.

However the poundage – the figure multiplied by the value of a non-domestic property to calculate its rates bill – will rise in Scotland to 49.8p in the pound, the joint-highest level since devolution began in 1999.

Today also sees the reintroduction of the higher property rate surtax in Scotland. Nearly 3,000 retail premises in Scotland fall into the scope of the surtax, which lifts the level of rates to 52.4p in the pound. This contrasts with England, where effectively the surtax is not as high. Rates are calculated in England using a standard poundage or multiplier of 51.2p in the pound, and a slightly lower one of 49.9p in the pound for small businesses.

With footfall on high streets and shopping centres yet to recover to pre-pandemic levels, one in six retail premises in Scotland lying vacant, and many companies still struggling to pay back debts incurred because of the pandemic, the Scottish Retail Consortium contends that business rates are being re-applied at a challenging time for shops. It has urged the Scottish Government to put the rating system on a “more financially sustainable basis” and to ensure firms north of the Border are not faced with bills that are higher than those levied on their counterparts in England.

David Lonsdale, director of the SRC, said: “The business rates waiver over the past two years of the pandemic has been substantial and much needed. It helped keep retailers afloat at a time when large swathes of the sector were forcibly shuttered for at least 220 days, when trading and capacity restrictions applied when shops were permitted to trade, and helped fund retailers’ outlays on PPE and Covid safety mitigations.

“As the guardrails of taxpayer support are withdrawn, retailers are ready to contribute their fair share. However, shopper footfall and retailers’ revenues are yet to climb back to pre-pandemic levels and firms are beginning to pay down Covid loans and tax deferral schemes.

“Coupled with the multitude of other government and supply-chain costs which are currently rising, the reinstatement of rates at an onerous 23-year high comes at a challenging time for the industry and retail destinations.

“That’s why we want to see a medium-term plan for lowering the rates burden permanently and putting it on a more financially sustainable basis, coupled with early moves to restore the level playing field with England on the higher property rate supplement so that all premises in Scotland benefit from having the most competitive business rates in the UK.”

The SRC said that retailers account for around one-quarter of the estimated 12,000 commercial premises in Scotland that attract the higher property rate surtax. It notes that the Barclay review of business rates, led by Ken Barclay, former chairman of Royal Bank of Scotland in Scotland, published in 2017, had called for parity on the surtax between Scotland and England to be restored by 2020.

According to the SRC, the Scottish Government has said it aims to restore parity on the surtax by the end of the current Scottish Parliament.

While relief in Scotland for firms in the retail, hospitality and leisure is in place for three months, in England there will be 50% relief on bills in those sectors for the full 2022/23 financial year, capped at £110,000 per business.