SCOTTISH retailers have called for a level playing field on business rates with England after it emerged thousands of firms in Scotland will collectively pay nearly £60 million more on the property tax than their counterparts down south in the next financial year.

The demand comes as new figures show that the Scottish Government expects to raise £127.8 million from the higher property rate (HPR) in the 2023/24 year, including £19.7m from shops.

Business rates are a form of property tax charged by local authorities to fund council services. They are calculated by multiplying a figure of pence in the pound known as the poundage by the rateable value of the property. In Scotland, the poundage was recently pegged at 49.8p but a higher property rate of 52.4p is applied to properties with rateable values of £100,000 and above.

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In England, there are currently two poundage rates, a standard multiplier of 51.2p for properties with a rateable value of £51,000 or more, and 49.9p for buildings valued below £51,000.

The Scottish Retail Consortium has found the application of the HPR means nearly 11,600 non-domestic properties across Scotland will between them pay £59m more in rates per year than if they were subject to the same poundage as in England. Shops liable for the HPR will pay £9.1m more, offices £6.9m, and hotels £2.3m, the SRC said.

The SRC released the figures following the response by Tom Arthur, Minister for Public Finance, Planning and Community Wealth, to two written parliamentary questions tabled by Alexander Stewart, Scottish Conservative and Unionist MSP for Mid Scotland & Fife. Mr Stewart asked how many properties will be subject to the HPR poundage in 2023-24, broken down by industry sector and local authority area, and how much the Scottish Government expects to raise through the HPR by industry and sector.

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Mr Arthur reported that a total of 11,570 properties would be liable to pay the HPR in 2023/24, with the higher rate of tax expected to raise a total of £127.8m over that year. The figures disclosed by Mr Arthur show that 2,390 shops would be liable to pay the HPR in 2023/24, with those properties expected to raise nearly £19.8m in gross HPR income after transitional relief. Some 2,520 industrial properties and 1,760 offices will pay the HPR in 2023/24, which will raise £20.3m and £14.9m in rates respectively.

SRC director David Lonsdale said: “The Scottish Government has made some headway on business rates including freezing the headline poundage rate for the coming year and introducing more regular commercial property revaluations. However, this makes it all the more striking that restoring parity with England on the higher property rate surtax isn’t being sped up.

“Indeed, with over two thousand medium-sized and larger shops – and eleven thousand premises overall – continuing to pay a higher business rate than counterparts or competitors down south, this Scotland-only surcharge increasingly sticks out like a sore thumb. We need to see a more ambitious approach and a faster pace towards restoring the level playing field with England on the higher property rate.”

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Currently, 12,080 business properties are liable for the HPR over the current, 2022/23 financial year in Scotland, including 2,960 retail properties. In response to a previous question in August, Mr Arthur reported that the HPR was expected to raise £122m in 2022/23, including £23.5m from shops.

The number of firms that will be liable for the HPR in 2023/24 will be influenced by changes in property rateable values, following the draft revaluation completed before Christmas, and the increase in the starting threshold from properties with a rateable value of £95,000 and above, to £100,000 and above.

The Scottish Government pledged in its Framework For Tax, published around 12 months ago, to restore parity with England on rates by the end of the current parliamentary term at Holyrood in 2026. But that could mean businesses in Scotland will have to pay £59m a year more in rates than their counterparts south of the Border for the next three years.

Ministers froze the poundage rate at 49.8p in the Scottish Budget for 2023/24 in December and introduced transitional relief to cap increases in rates liabilities further to November’s draft revaluation of non-domestic properties. The relief will mean that, in 2023/24, increases in rates will be capped at 37.5% for large businesses, 25% for medium-sized properties, and 12.5% for small properties, before rising in subsequent years.

The small business bonus scheme will remain in place, though the threshold for 100% relief will be reduced to properties with a rateable value of £12,000 from £15,000.

There will also be transitional relief for small businesses that will find themselves no longer eligible for the small business bonus scheme because of changes to thresholds.

A spokesperson for the Scottish Government said: “The Scottish Budget 2023-24 delivers the number one ask of the business community by freezing the poundage at 49.8p, the lowest in the UK for the fifth year in a row, saving ratepayers £308m compared to an inflationary increase.

“This ensures that more than 95% of properties in Scotland continue to be liable for a lower property tax rate than anywhere else in the UK. From 1 April 2023 the Scottish Government will further reduce the number of properties liable for the higher property rate by increasing the rateable value threshold at which this applies from £95,000 to £100,000.”