Business rates – or non-domestic rates as they are also known – are a tax levied on shops, bars, restaurants, offices and other commercial properties to pay towards Local Council services such as education, social care and waste management, to name a few. Liability for such ‘rates’ initially rests with the property owner, however it is usually passed on to the tenant under a commercial lease.
When purchasing or leasing a commercial property, there is such a multitude of factors to be considered that business rates are often overlooked or treated as an afterthought. That being said, the economic pressures that town and city centre businesses in particular are facing due to rising costs has meant that rates have grown in public consciousness of late, with many calling for cuts or at least financial assistance therewith, as occurred during the COVID pandemic. Sir John Timpson, Owner and Chairman of The Timpson Group, recently made his views clear to a House of Lords committee that the current business rates regime is having a damming impact on our high streets.[1] In his address, Sir John Timpson specifically referenced the post-pandemic struggle that physical retailers face in competing with online retailers.
How Do I Know What the Rates Are for A Commercial Property?
Rates are calculated according to the ‘Rateable Value’ of a commercial property. The Rateable Value itself is based on an estimate of the open-market rental figure that the property would achieve, as well as other relevant considerations such size and usage.
The Scottish Assessors Association website provides a ‘Valuation Roll’ which lists the Rateable Value of the majority of commercial properties in Scotland.[2] Whilst commercial property solicitors will often obtain rates information when carrying out their due diligence investigations, it is advisable for prospective purchasers and/or tenants to search the Valuation Roll themselves while the proposed transaction is in its infancy to avoid an unwelcome shock further down the line.
Are Reliefs Available?
Notwithstanding the above, there are a select number of rates reliefs available that business owners and operators may be eligible for. It is worth speaking to a suitably qualified surveyor about whether any of these reliefs are available in your circumstances.
Some of the most commonly available reliefs are:
- Small Business Relief - although not available to all types of businesses (for example, betting shops and payday lending businesses are excluded), varying amounts of relief may be available where the combined Rateable Value of all the premises a business occupies is £35,000 or less, the Rateable Value of individual premises are £20,000 or less and the premises are actively occupied;
- Charitable Relief - registered charities can apply for relief of 80% or more if a property is used primarily for charitable purposes; and
- Empty Property Relief – this varies depending on the Local Council, however relief may be available where a property has a Rateable Value of £100,000 or less and has been empty for more than 6 months.[3]
For assistance with purchasing or leasing commercial property throughout Scotland or any other commercial property-related needs, we invite you to contact our Commercial Property team today on 0141 221 1919 Our team of experts is dedicated to providing you with the highest level of support to help you achieve the best possible outcome for your business. We will guide you through the legal process with the utmost diplomacy and care, ensuring you are fully informed and comfortable with every step. Our focus is always on finding the best solution to meet your needs.
[1] Sir John Timpson: Business rates are the 'real problem' on the high street - Retail Gazette
[2] The Valuation Roll – Scottish Assessors (saa.gov.uk)
[3] Non-domestic rates relief - mygov.scot
