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Business rates

Pressure remains for Scots rates reform

PwC David GlenThe uniform business rate is to be abolished in England with local government allowed to keep all the revenue and councils given the right to cut rates.

It is the latest move in a gradual reform south of the border and will put pressure on the Scottish government  which has faced demands from business organisations to echo these changes.

David Lonsdale, Director of the Scottish Retail Consortium, said: Scotland’s £2.8 billion business rates system is not fit for purpose, disincentivises investment and has become a disproportionate burden on businesses the length and breadth of the country.

“With the Chancellor now confirming that England’s review of business rates will conclude in the Spring, and with Northern Ireland’s review of rates already under way, it is imperative that Scottish ministers look afresh at this issue and at the options for a fundamentally reformed tax that better reflects economic and trading conditions, promotes growth and reduces the tax burden.”

David Glen (above), head of tax, PwC in Scotland, said action has already been taken on some measures to change business rates in Scotland.

“Plans to give local authorities in England the power to retain all local business rates and to lower those rates have been pre-empted in Scotland with John Swinney, Scottish finance minister, announcing last month that Scottish Councils would have such powers from 31 October 2015.

“The intention is that such powers will incentivise economic development and enable local voices to define clearly how this should happen . Those areas that can readily differentiate themselves from their competitors are more likely to be successful in both attracting and supporting business growth. The private sector is the vital engine for job creation and growth and this initiative should pave the way for councils to use these new powers to attract businesses and regenerate high-streets.

“However, it is also a fundamental change to local authority funding in an already complex system and there is a risk that disparity between business rates set by councils could remove the present level playing field, and might be difficult for smaller Local Authorities with very low business rates income to set competitive tax rates.

“There will still be concerns for councils in smaller towns and rural areas, where many business rate payers are exempt, who have previously benefitted from the governments’ redistribution of the proceeds.”

Moves were announced to extend the small business rates relief, another devolved issue.

Jim DuffyJim Duffy (right), chief executive of the incubator Entrepreneurial Spark said: “I’d like to see the Chancellor go deeper and provide more tax breaks and support for entrepreneurs. We’d like to see more initiatives to help start-ups recruit, plus easier access to funding for high potential businesses.”

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