Scottish businesses face a growing property tax disadvantage

The Scottish government has reduced poundage rates for 2026/27, but the reductions do not go far enough to close the competitive gap. Even with the revised figures, Scotland’s large business poundage rate (54.8p) remains significantly higher than the largest multiplier in England for properties with rateable values above £500,000 (50.8p).

Over the life of a revaluation cycle, this adds up to a significant financial burden that operators cannot ignore when assessing future investment and expansion plans.

The Scottish Budget confirmed that RHL sector relief will move to 15 per cent from April 2026 and extend to both basic and intermediate poundage rate properties. While the expansion is a positive step in principle, the impact is blunted by two critical constraints which will limit support for larger operators:

• Relief is capped at £110,000 per business per year.
• Relief is available only for properties with a rateable value up to £100,000.

The introduction of Revaluation Transitional Relief is a constructive measure, capping increases in liabilities until the next revaluation in 2029. This will help mitigate sharp cost escalations arising from the 2026 revaluation.

This measure disproportionately favours occupiers of lower-value properties, offering them significantly greater protection from increases. In contrast, properties with a rateable value exceeding £100,000 are subject to the highest permissible increase, capped at 50 per cent. Consequently, larger occupiers receive materially less cushioning against rising liabilities and are required to bear a disproportionate share of the overall cost impact.

However, the benefit is tempered by the reality that Scottish ratepayers are starting from a higher poundage baseline than their English counterparts. Mitigation helps, but it does not resolve the underlying competitiveness issue.

On 27 January, the Treasury announced business rates support package for pubs and live music venues, providing a 15 per cent reduction in rates for 2026/27, followed by a two-year real-terms freeze. The measure applies universally to pubs and live music venues and is neither capped nor constrained by subsidy control limits. In the absence of comparable intervention, businesses operating in Scotland face a growing and unjustified disparity in support.

In Scotland, an independent review group has been established to examine the valuation of licensed hospitality premises. We expect to be appointed to the advisory panel and welcome the opportunity to contribute to shaping much-needed reform in the way this sector is assessed for business rates. There is a clear need for change, particularly to move away from the current reliance on turnover as a valuation basis, which represents an overly blunt and inadequate instrument for reflecting the operational realities of hospitality businesses. Any recommendations resulting from this review will not be implemented within the 2026 revaluation, operators will have to wait until 2029 to experience any benefit from this.

A pressing concern for all ratepayers is the proposal deadline associated with the 2026 revaluation. There is a proposal deadline of 31 July 2026 for values effective from 1 April 2026. After this point, businesses will not be able to dispute their property’s valuation until 2029.

We encourage organisations to urgently assess their draft valuations, model their future liabilities and ensure they have the necessary evidence to challenge inaccuracies within the permitted timeframe.

Louise Daly, Head of Rating Scotland, Colliers