Changes to Non-Domestic Rates to raise revenue

The Scottish Fiscal Commission has today published updated forecasts of income from Non-Domestic Rates (NDR) reflecting the changes introduced through the Non-Domestic Rates (Scotland) Bill. These forecasts accompany the Scottish Government’s revised Financial Memorandum following the conclusion of Stage 2 of the Bill.

The Bill introduces a number of measures which raise NDR revenues overall. The first three changes are together expected to raise an additional £17 million in 2020-21 – only properties in active occupation being entitled to reliefs, a lengthening of the reset period for Empty Property Relief and the removal of charitable relief for mainstream independent schools.

The amount raised through the changes increases each year to £377 million in 2024-25. From 2022 onwards the requirement for some student accommodation to pay NDR raises around £18 million each year and devolving Empty Property Relief to councils increases NDR revenues paid to the Scottish Government by around £102 million.

The amendment to devolve NDR to councils from 2024 is forecast to have no financial effect on NDR as we assume the same poundage continues. The same amendment results in two further changes, firstly to remove a number of reliefs raising £355 million in NDR and secondly removing the Large Business Supplement which reduces NDR revenues by £128 million.

The Commission provides independent forecasts to assist the Scottish Parliament and the public in understanding the Scottish Government’s policy.

Note to Editors:

  1. The Commission’s Supplementary Costing: Non-Domestic Rates (Scotland) Bill is now published
  2. Our publication accompanies the Scottish Government’s revised Financial Memorandum published on the Scottish Parliament website.
  3. The Commission publishes forecasts of Non-Domestic Rates twice a year, the next forecasts will be published to accompany the Scottish Budget.
  4. The NDR Bill has a number of changes which the Commission has not costed as these do not fall within its remit or are deemed to have no financial effect. Outside the Commission’s remit are any changes affecting local Government funding or the costs of administering NDR. Changes deemed to have no financial effect on NDR income include the timing of debt collection processes, requirements for self-catering properties to evidence being let for 70 days and the amendment relating to music schools in the state sector.
  5. The Commission’s analysis represents the collective view of the Scottish Fiscal Commission, comprising the Commissioners: Professor Francis Breedon, Professor Alasdair Smith, Professor David Ulph, and the Chair, Dame Susan Rice.