This item was published during the term of a previous administration that ended in April 2007
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Further poundage rate cut for businesses
13/12/2006
Scottish businesses will increase their competitiveness with the rest of the UK when the Executive further reduces the business rates poundate, MSPs were told today.
The rate is currently 44.9p in Scotland and 42.6p in England. From April 2007, the provisional rate in Scotland will be 44.1p - the same as England. This will fulfil the commitment to bring Scotland's business rates into line with England.
Around £169 million will be provided in 2007-08 to align the business rates poundage with England - this builds on the £90 million provided in 2006-07 to halve the gap. This underlines the Executive's commitment to growing the economy.
Minister for Finance and Public Service Reform Tom McCabe said:
"Our top priority is growing the economy. We are determined to ensure all businesses - large and small - can flourish.
"That means ensuring we have a 21st Century transport infrastructure. It means ensuring we have a skilled population. And it also means ensuring our businesses have a competitive edge over their counterparts.
"We are delivering on our pledge to bring Scottish business rates into line with England. Lower property valuations in Scotland combined with the same poundage mean we now have a genuine competitive edge.
"We have listened - and we have acted. We now urge businesses to take full advantage of this opportunity to invest these savings to help deliver our shared priority of growing the Scottish economy."
Background:
The Executive announced on October 6 2005 that business rates would fall over two years from April 1 2006. The business rate poundage gap was halved on April 1 2006 from 46.1 pence to 44.9 pence - a decrease of 1.2 pence. The rate in Scotland is currently 44.9 pence and 42.6 pence in England. The Small Business Rates Relief provides for a rates reduction of up to 50 per cent to smaller businesses with a rateable value of under £11,500 (£10,000 in England).
The new rate for Scotland will be 44.1 pence - the same as England. This new rate for Scotland represents a decrease of 0.8 pence from 2006-07. This builds on the 1.2 pence reduction in 2006-07 and effectively means that Scottish businesses in 2007-08 will benefit from a combined decrease of 2 pence in the business rate poundage over the last two years.
The Executive is providing an estimated £169 million in 2007-08 to fully close the gap with England. This builds on the estimated £90 million which the Executive is providing in 2006-07 to halve the gap with England this year.
The Executive has also reduced the poundage rate supplement paid by larger businesses to 0.3 pence in 2007-08 - the same level as England. This represents a decrease of 0.1 pence from 2006-07. The poundage rate supplement helps to contribute towards the cost of providing the Small Business Rates Relief Scheme. Around 70 per cent of businesses in Scotland already benefit from a rates reduction of up to 50 per cent under the Small Business Rates Relief Scheme in 2006-07 and will continue to do so in 2007-08.
The 2005 non domestic rating revaluation showed that, on average, rateable values in Scotland had increased by 13.3 per cent, compared to 17.7 per cent in England. As a result, the rates burden on Scottish businesses relative to England had already been falling before the Executive committed to equalise the poundage with that of England.