The Scottish Government is reviewing recent changes to non-domestic rates relief for empty property. Background information is set out below, for reference. Specifically, the three changes implemented in 2013-14 were:
To help inform our on-going approach, we would be grateful for written views and evidence on the effects of these changes. Please if possible could responses be submitted by return by 11 December 2015. Later responses would also be welcomed. The review will also continue to be discussed with stakeholders, including at the next meetings of the IRRV NDR Practitioners Group in December and the Scottish Ratepayers Forum in January.
Please feel free to forward this email on to whomever you think might be interested. We look forward to hearing you, and would be happy to discuss any aspect.
Kind regards,
Louise Hester
Background
The Local Government Finance (Unoccupied Properties etc) (Scotland) Act 2012 increased Scottish Ministers’ flexibility to vary rates relief for unoccupied properties.
The 2012 Act amended sections 24 and 24A of the Local Government (Scotland) Act 1966 to allow Scottish Ministers, by regulations, to vary the amount of rate relief in relation to unoccupied premises (or unoccupied parts of premises where there had been an apportionment under section 24A of the 1966 Act).
The Non-Domestic Rating (Unoccupied Property) (Scotland) Amendment Regulations 2013 changed the rate liability after a three month period of exemption for certain unoccupied premises. The liability altered to 90% of the liability that would have arisen if the premises were occupied (the rate up to 31 March 2013 was 50%). This means that a standard (commercial) empty property is eligible for 100% relief for the first three months and thereafter 10% relief.
The regulations made no change to the rate levied on unoccupied industrial or listed property and these continue to receive 100% relief for the unoccupied period.
In addition two new incentives were created by the 2013 Regulations with effect from 1 April 2013, referred to as Fresh Start and New Start. Fresh Start applies where a property has been empty for over 12 months and then became occupied. It applied if the property had a rateable value of up to £45,000 and had last been occupied as a shop or office (or where there had not been previous use, the use was as a shop or office). For the first year of occupancy the ratepayer could apply for the property to be deemed to be unoccupied, which allowed a 50% reduction in the rates payable. The value of relief available was capped by State aid de minimis (200,000 euros over a rolling three year period).
The Non-Domestic Rating (Unoccupied Property) (Scotland) Amendment Regulations 2014 extended eligibility for Fresh Start from 2014-15 to rateable value up to £65,000 and to include properties last occupied as pubs, hotels and restaurants (or where there has not been previous use, the use is as a hotel, public house or restaurant).
Under New Start, a new property first entered in the valuation roll on or after 1 April 2013 can be eligible for 100% rate relief for up to 18 months while it is unoccupied (capped by State aid de minimis). The relief is available for properties entered on the valuation roll up to 31 March 2016. The 18 months of relief need not be claimed continuously, and can be claimed if the property is unoccupied on or before 31 March 2018.
The estimated costs of the three reliefs are in Table 1.
Table 1: Estimated cost of reliefs (£)
|
Actual 2012-13 |
Actual 2013-14 |
Notified 2014-15 |
MYE 2015-16 |
|
|
Empty |
£169.1m |
£146.5m |
£141.0m |
£132.0m |
|
New Start |
|
£130k |
£484k |
£443k |
|
Fresh Start |
|
£189k |
£536k |
£408k |
Source: Non-domestic rate income returns (from councils)
Note: figures for 2014-15 and 2015-16 are provisional.
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