Shops occupying medium sized and larger premises in Scotland are set to face £162 million more in business rates over the next three years than their equivalent-sized counterparts down south, according to the Scottish Retail Consortium (SRC).
The new financial year for business rates commences this Wednesday (1 April). Smaller stores liable for the Basic and Intermediate Property Rates will benefit from the Scottish Government’s new Retail, Hospitality, and Leisure sectors’ rates relief (RHL).
This new RHL relief is very welcome, but the RHL poundage rates will still be above those levied in England whilst the amount that can be claimed will be capped, unlike in England.
In addition, the 2,296 shops in Scotland with a rateable value of £100,000 or above will not be eligible for the Scottish Government’s new RHL rates relief. Instead, these shops will be liable for the Higher Property Rate of 54.8p in the £ from 1 April whilst similar sized stores in England will pay 43p in the £.
As such these medium-sized and larger Scottish stores will be paying out £54 million a year more than their England-based counterparts.
The SRC says a more competitive business rates regime is central to rejuvenating Scotland’s high streets and town and city centres and making them desirable locations for retailers to invest in.
David Lonsdale, Director of the Scottish Retail Consortium, said: "Scottish Ministers have made headway on business rates by introducing the new Retail Hospitality and Leisure sectors’ rates relief. To their credit the Scottish Government has recognised that retailers’ pay a disproportionate amount in business rates and the new rates relief is a positive step forward.
"However, the new RHL relief falls well short of what is required. The convoluted restrictions and cap on eligibility means it won’t benefit all stores and it will be less generous at every level compared to the relief on offer to retailers in England from 1 April.
"Unfortunately, the rates relief won’t even apply to medium-sized and larger stores which are liable for the Higher Property Rate. These shops will pay a business rate substantially above that of similarly-sized counterparts down south over the next three years.
"As it stands Scotland risks becoming a materially less competitive place to operate shops and our fear is this could see a shift in investment down south. Continued investment in stores is essential to keep them viable and attractive to customers and to minimise the number of shuttered shops.
"It is not in the interests of Scotland’s economy for shop owners to be incentivised to invest in Berwick-upon-Tweed over Bothwell, Buckhaven, or Blairgowrie.
"A far more ambitious approach is required from those political parties seeking to form the next Scottish Government, one that at the very least ensures a competitive level playing field with England and which delivers on the industry’s vision to make Scotland the best place in the UK to grow a retail business.”