Medium and larger retailers in Scotland are set to pay £54 million more in business rates than their counterparts in England from 1 April, according to new figures revealed through a parliamentary question.
The data shows that 2,296 Scottish retail properties with a rateable value of £100,000 or more will be subject to the Higher Property Rate of 54.8p in the pound. In contrast, similar-sized stores in England will face a rate of 43p, creating a significant cost disparity for retailers operating north of the border.
Because the Higher Property Rate is applied as a slab tax, the full rate applies to the entire rateable value of a property once the threshold is met. This means affected Scottish retailers will face a markedly higher overall tax burden than their English counterparts.
Relief gap widens north-south divide
While the Scottish Government has introduced a new Retail, Hospitality and Leisure (RHL) rates relief scheme, it will not apply to these larger stores. Instead, they will pay a poundage rate that is 27 per cent higher than in England.
Smaller retailers in Scotland will benefit from the RHL relief. However, the scheme is both capped and more restrictive than its English equivalent, meaning even eligible businesses will receive less generous support.
The Scottish Retail Consortium welcomed the introduction of the relief but warned that it falls short of what the industry had called for.
‘Materially more expensive’ to operate
David Lonsdale, director of the SRC, said the divergence in rates policy risks undermining Scotland’s attractiveness as a retail investment destination.
“Scotland’s medium sized and larger stores will effectively be stumping up a £54 million surcharge from next month when new business rates come into force, compared to their English counterparts,” he said.
“The decision not to match the new rates regime in England will put into sharp focus the difference between trading north and south of the border.”
He added that while the introduction of RHL relief was a step forward, its limitations reduce its overall impact.
“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.”
Investment concerns grow
Lonsdale warned that the disparity could influence where retailers choose to invest, with potentially long-term consequences for Scotland’s high streets.
“As it stands Scotland risks becoming a materially more expensive place to operate shops and this could see a shift in investment down south,” he said.
“Continued investment in stores is essential to keep them viable and attractive to customers and to minimise the number of shuttered shops.”
He added that policy divergence could ultimately incentivise businesses to prioritise locations in England over Scotland.
“It is not in the interests of Scotland’s economy for shop owners to be incentivised to invest in Berwick-upon-Tweed over Balloch, Bathgate, or Brechin.”
Calls for greater ambition
The SRC is now calling on political parties ahead of the next Scottish Government to take a more ambitious approach to business rates reform.
“A far more ambitious approach is required… one that ensures at the very least a level playing field with England and which delivers on the joint industry and government vision to make Scotland the best place in the UK to grow a retail business,” Lonsdale said.
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