Concern over business rates at five-year high – Daily Business

Pubs and restaurants are among those at risk from rocketing costs (pic: DB Media Services)

Concern over soaring business rates is at a five-year high as just under half of Scottish firms (48%) fear the impact of the latest revaluation.

Rates for many firms will skyrocket from today, in some cases by 500%, putting thousands of businesses and jobs at risk, particularly in the hospitality and retail sectors.

The Scottish Chambers of Commerce says business rates has rapidly climbed the list of concerns across the economy, a 20-percentage-point increase in a single quarter and now second only to tax.

Doug Smith, the Chambers’ vice-president, said: “The sharp rise in concern around business rates should be a clear warning sign ahead of the election.

“In just one quarter, we have seen a significant jump in the number of firms telling us that rates are a major pressure. That reflects a deeper, structural issue which is driving up the cost of doing business in Scotland.

“Business rates thresholds have barely moved in recent years, while inflation has pushed up costs and rateable values. In reality, that means more firms are being pushed into higher rate bands simply because their rateable value has risen – not because the business is growing.”

The Scottish Hospitality Group has launched a nationwide billboard campaign demanding action to cut business rates.

SHG and the Scottish Retail Consortium have urged the Scottish government to follow the example of Northern Ireland where the Assembly has halted rate increases and protect businesses.

Stephen Montgomery, director of the Scottish Hospitality Group, said: “These increases are costing jobs, it is as simple as that.

“What we are seeing is an out of date system which is completely disconnected from the reality of running a licensed hospitality business.

Stephen Montgomery: out of date system

“Discounts are of course welcomed for those with a rateable value of under £100k, but transitional relief is simply a slow injection towards the inevitable failure of businesses already under pressure. Those with a rateable value of over £100k have basically been told to suck it up!”

Shops occupying medium to large spaces in Scotland face paying £162m more in business rates over the next three years than the same size stores in England, according to the Scottish Retail Consortium.

Smaller stores which are liable for the Basic and Immediate Property rates will be able to benefit from the Scottish Government’s new Retail, Hospitality and Leisure sector’s rates relief (RHL). The SRC says the RHL relief is “very welcome” but the poundage rates will still be above those in England.

The amount that can be claimed by businesses in Scotland will also be capped, unlike in England.

The Scottish Government has ordered a review of the rates assessment process, but Scottish Tory leader Russell Findlay has also said ministers should have followed the Northern Irish example.

He described the failure to pause ahead of today’s implementation of the new valuations was “a huge missed opportunity”.

He noted that some Scottish businesses have been given 90% relief, but said that begged further questions.

“What sort of system can be considered fair if it requires 90% relief? It exposes the system as unfair.”

Russell Findlay: missed opportunity (pic: DB Media Services)

He said Scotland has 14 rates assessors to England’s one and that the system is overdue review.

The Chambers survey, in conjunction with the Fraser of Allander Institute, also showed that business confidence remains weak with 37% of firms reporting a fall in confidence and only 28% reporting an improvement.

Investment also remains subdued with only 17% of businesses increasing investment in Q1, while nearly a third reduced it.

Three-quarters (73%) of firms expect to raise prices in the next quarter, up from 66% in Q4, indicating ongoing pass-through of cost pressures to customers

Professor Mairi Spowage, director of the Fraser of Allander Institute, said: “Overall, the Q1 2026 results point to an economy that continues to face significant headwinds but may be beginning to find some footing.

“Whether these modest improvements can be sustained will depend on how both domestic pressures and global uncertainties evolve in the months ahead.”

#Concern #business #rates #fiveyear #high #Daily #Business