Rating Update – Scottish Budget 2025/26 UBRs and Reliefs
The Draft Scottish Budget for 2025/26 introduces key updates to business rates, including a freeze on the small multiplier and inflation-linked increases for medium and large multipliers. Large businesses face additional costs due to the retention of the large business supplement. Relief schemes offer some support, but disparities with the rest of the UK persist.
The Scottish Government has published the Draft Scottish Budget for 2025/26.
While the small multiplier has been frozen for a further year, the medium and large multiplier will continue to increase in line with inflation.
Scotland’s medium and large properties with Rateable Values (RVs) of £51,001 or more comprise less than 9% of all non-domestic properties but their occupiers will now contribute almost 75% of the business rates tax bill to the Scottish Government.
The Scottish Government continues to maintain the large business supplement, despite it being a manifesto policy in the current and previous parliaments’ terms to remove. This will cost Scottish businesses with properties of more than RV£100,000 an extra £60 million, compared with their counterparts based south of the border.
This inflationary increase comes as business are dealing with the fallout of tax rises contained in Westminster’s Autumn Budget.
2025/26 Uniform Business Rate (UBR)
The Scottish Government has formally announced the freezing of the basic (small) UBR for 2025/26 at 49.8p, avoiding the inflation-based increase that was predicted.
This aligns with the Autumn Budget announcement in England, which saw the small multiplier frozen for a sixth consecutive year.
In Scotland, the last increase of the basic UBR was in the 2022/23 financial year.
The Scottish Government announced that it would maintain the intermediary rate poundage for properties in the medium-tier band (RVs £51,001 to £100,000), which will receive the full impact of the inflation-based increase to 55.4p (up from 54.5p).
For large businesses in Scotland (properties with RVs greater than £100,000) will see the UBR increase to 56.8p (up from 55.9p).
Reliefs
Small businesses
As a result of the basic rate being frozen, small businesses will continue to pay less in Scotland than the rest of the UK. Furthermore, the Small Business Bonus Scheme (SBBS) relief has been maintained, taking over 100,000 properties removed from payment of business rates altogether.
Hospitality Relief
There was some positive news in that the Scottish Government has confirmed a more generous Hospitality Relief scheme for 2025/26 than for the current year. However, Ministers have again refused to follow Westminster and have chosen to introduce a watered-down version. In England, the relief applies to all qualifying properties subject to a cap of £110,000 per business. In Scotland the relief will be limited to properties with an RV of less than £51,000, who will receive a 40% discount on 2025/26 rates payments, but as like England, this will be subject to the same cap of £110,000 per business.
Relief will be maintained for Island communities with a 100% relief for hospitality properties in island communities, capped at £110,000 per business and likely subject to UK subsidy control.
The Budget statement did not reference any continued relief scheme for the 2026/27 rate year. At this stage, the Scottish Government has not indicated that it intends to replicate the new lower multipliers for qualifying retail, hospitality and leisure properties from 2026. While this will be disappointing for those in the retail, hospitality and leisure sectors, it may be more welcome news for those with assessments of over RV £500,000, where in comparison ratepayers in England will face higher multipliers from 2026 to cover the cost of the discounts. We will seek further guidance on this from the Government and update you if we receive any feedback.
All other reliefs
The Scottish Government has announced that all other central Government-controlled reliefs will remain the same for 2025/26.
Empty rates relief remains under the control of Local Authorities, and they have devolved powers to apply or reduce empty property rates relief as determined by them.
2026 Revaluation
The 2026 revaluation is now fast approaching with the ‘tone date’ for valuation purposes being 1 April 2025.
The Scottish Assessors has or will be issuing a request for ‘Return of Information Form’. The form is a statutory document that requires it to be completed in a short period of time. Failure to supply the information could result in a civil penalty being applied up to the equivalent of 71% of the Rateable Value of the property.
Pre-agreement discussions will commence with the Scottish Assessors early in the new year and therefore early engagement in the process is essential. Please liaise with us on this matter as soon as possible to ensure that your interests are protected.
Observations
The discrepancy in business rates for big business between Scotland and the rest of the UK continues.
Businesses in Scotland are facing a higher financial burden in comparison to their counterparts in other parts of the UK. This discrepancy is a crucial factor for businesses operating in Scotland to consider and highlights a significant policy lever that could be used to support Scottish businesses.
The devil will be in the details as usual, and we await the release of secondary legislation over the coming weeks, particularly on the intrinsic details of the qualifying properties for Hospitality Relief. We will closely monitor these developments and will continue to provide you with pertinent updates and advice to help you navigate these changes effectively.
Contact us
Please do not hesitate to contact us if you have any queries. We are here to discuss any specific issues regarding your properties and will keep you informed of further news on business rates.
