Ministers warned against raising business rates ‘already at 25-year high’

Ministers are being urged not to increase business rates in this year’s budget amid fears the tax burden on firms could surpass 50% for the first time since devolution.

The Scottish Retail Consortium (SRC) said its analysis found that, if the Scottish Government opted to increase rates in line with inflation, businesses could face an extra £13 million tax bill.

Inflation was recorded at 1.7% last month – its lowest rate in three and half years.

Ministers often use it to calculate business rates for the year ahead.

The trade body said business rates have already reached a 25-year high and that another inflation-linked uprate could see the tax rate for firms push past 50%.

The SRC said medium and larger stores were previously hit with a 6.7% rise in the intermediate and higher property tax rate.

And it said the 2,500 shops liable for the higher rate in Scotland already pay more than businesses in England.

In September, Finance Secretary Shona Robison announced up to £500 million in cuts this year, alongside the use of up to £460 million in funds from the ScotWind scheme.

She warned the country was facing “enormous and growing” financial pressures as she looked to balance the books in this year’s budget.

David Lonsdale, director of the SRC, urged the Scottish Government to resist hiking business rates to increase the tax intake.

He said: “Retail sales have flatlined over the past year and trading conditions remain challenging.

“Despite this, it seems a chunky £13 million extra could be added to retailers’ rates bills next spring.

“With the business rate already at a 25-year high, a far more ambitious and coherent approach is urgently required, one which views rates as a means of stimulating commercial investment in retail destinations rather than squeezing yet more tax revenue. Increasing taxes further could exacerbate the problem.

“We hope Scottish Ministers will act in the budget to focus on economic growth and help make Scotland the best place to grow a retail business in the UK, by ruling out any increase in the business rate and by shelving the mooted surtax on grocery stores.”

Finance Secretary Shona Robison said: “The 2024-25 Scottish budget delivers a competitive non-domestic rates regime including the lowest poundage in the UK for the sixth year in a row, and a package of reliefs worth an estimated £685 million.

“Our Small Business Bonus Scheme remains the most generous of its kind in the UK.

“Decisions on non-domestic rates for next year will be considered in the context of the Scottish budget 2025-26.”