Scottish Budget: Business Rates Announcement Branded “Underwhelming”
The Scottish Budget has been branded as “underwhelming” in terms of business rates changes announced, according to Louise Daly, Head of Business Rates in Scotland at property consultancy Colliers.
Daly believes the changes puts Scotland in a worse property tax position than in England. This is particularly for businesses in the retail, hospitality and leisure (RHL) sector. According to Daly this could have a detrimental impact and “could affect decisions and investment from large operators” considering investing in Scotland.
The main announcements were:
Non-Domestic Rates Poundage
The Scottish Government has maintained the three thresholds but reduced all poundage rates for 2026/27:
| 2025/2026 | 2026/2027 | |
| RV up to £51,000 | 49.8p | 48.1p |
| RV£51,001 to £100,000 | 55.4p | 53.5p |
| RV over £100,000 | 56.8p | 54.8p |
Retail, Hospitality & Leisure (RHL) Relief
- From 1 April 2026, RHL relief will apply at 15% for properties on both basic and intermediate rates (previously this was 40% on the basic rate only).
- Relief will be capped at £110,000 per business per year and apply for the full three-year revaluation cycle.
- Island and remote area properties will benefit from 100% relief, also capped at £110,000 per business per year.
Revaluation Transitional Relief
To ease the impact of revaluation, a Revaluation Transitional Relief is being introduced, gross bill increases will be capped up to the next revaluation in 2029. Increases in non-domestic rates gross liabilities due to revaluation will be capped at the following percentages in cash terms in 2026-27:
| Year on year Transitional Relief Caps 2026-2027 to 2028-2029 | |||
| 2026/2027 | 2027/2028 | 2028/2029 | |
| Small (RV up to £20,000) | 15% | 22% | 38% |
| Medium (RV £20,001 to £100,000) | 30% | 44% | 75% |
| Large (RV to £100,000) | 50% | 75% | 113% |
Other Key Measures
- Small Business Bonus Scheme (SBBS) and Business Growth Accelerator Relief will be maintained for the next three years.
- From April 2026, SBBS eligibility for short-term lets will require a valid licence.
- Small Business Transitional Relief has been introduced for those qualifying ratepayers who will no longer be eligible for small business bonus scheme from 1 April 2026. Phased increases are contained in the following table:
| Small Business Transitional Relief (for those qualifying for SBBS in 25/26 but not in 26/27) | |||
| 2026/2027 | 2027/2028 | 2028/2029 | |
| Current 2025/2026 RV up to £20,000 | 25% | 50% | 75% |
- 100% relief for EV charging points for 10 years from April 2026.
Louise Daly commented, “Whilst we welcome the expansion of RHL relief, we note the reduced rate and cap which may limit support for larger operators in the sector, particularly compared to England’s system. Concerningly, the poundage rates in Scotland are also higher than in England, with even the large poundage (multiplier) for properties over £100,000 (54.8p) in Scotland even higher than the largest multiplier for properties with RVs over £500, 000 in England. (50.8p).
In Scotland relief is only available for properties on the small or intermediate poundage rate – so for properties with an RV up to £100,000. This is opposed to lower RHL multipliers and lower general multiplier rates applying to all properties and RV levels in England. According to the UK government its new RHL multipliers will benefit 750,000 properties south of the border.
In addition, In Scotland, RHL relief is capped at £110,000 per annum per business, whereas in England no such caps apply.
Larger operators are therefore going to be detrimentally impacted in Scotland compared to their English counterparts.”
Daly continued, “It’s also disappointing to see no change in the SBBS scheme in Scotland.”
She concluded, “ We are underwhelmed and urge our clients to take a proper review on what their new rates bills will be and how these changes impact their portfolios. There is a proposal deadline of 31st July 2026 in respect of values coming into effect from 1st April 2026 and after this point, businesses will not be able to dispute the value set on their properties at revaluation until 2029. Businesses with properties in Scotland need to act now. Overall, it’s very disappointing for Scottish business.”
Leon Thompson, Executive Director of UKHospitality Scotland said: “Today’s Budget has not sufficiently addressed the challenges that hospitality businesses in Scotland face, and the majority will still be paying higher business rates bills in April.
“While the reduction in the poundage is positive, it does not offset significant increases in business revaluations and the loss of 40% relief.
“The increases to rateable values, often in excess of 100%, bear no relation to the trading environment hospitality businesses are operating in and they cannot trade their way to paying higher taxes.
“The package of reliefs put forward to help mitigate the impact of these increases is merely a sticking plaster to cap eye-watering bills. The increases facing our local pubs, hotels, restaurants and cafes over the next three years are still staggering.
“I urge the Scottish Government to go further in its support of hospitality, or we will only see job losses and business closures accelerate as a result of our sector’s ever-increasing tax burden.
“The commitment to pass on any additional funding from further support for the sector on business rates in England is crucial, and I hope the Scottish Government will move swiftly to use those funds, should that support be announced in England.”