The Scottish Government

LOCAL GOVERNMENT FINANCE

NON-DOMESTIC RATES (BUSINESS RATES) - A GUIDE

Part 1 - Who pays non-domestic rates (business rates)?

Part 2 - Paying your bill

Part 3 - Rateable Values and Appeals

Part 4 - Contacts

1. In this section we will tell you about:

• Who has to pay Non-Domestic Rates;
• How the council works out your bill; and
• Reliefs and exemptions from Non-Domestic Rates.

1.1 Who has to pay Non-Domestic Rates?

The occupier of a non-domestic property normally pays rates - usually this is the owner-occupier or tenant. If a property is empty, the owner or tenant may pay a reduced rate.

1.2 What is a non-domestic property?

Non-domestic properties are properties such as shops, offices, warehouses and factories, and any other property that is not classed as domestic property. In some cases, properties may be used for both domestic and non-domestic use (for example, a Guest House or Hotel) in which case both council tax and non-domestic rates will be charged. It is the Assessor who determines the classification of properties as domestic and non-domestic.

1.3 What if I work from home?

If you work from home, you may be liable for non-domestic rates on the part of the property used for work, and you will be liable for council tax for the rest of the property (although your property's valuation band may change). It will depend on the circumstances of each case and you should ask your local Assessor for advice. Contact details for Assessors can be found at Part 4 below. The Scottish Assessors website is at: www.saa.gov.uk

1.4 What if I own a Holiday Home or a Bed and Breakfast Establishment?

Unless you plan to make your holiday home available for let for at least 140 days a year, you will not have to pay non-domestic rates on the property. You will have to pay council tax instead.

If you offer bed-and-breakfast accommodation in your own home to six people (or less), you will not be liable for non-domestic rates as long as you are living in the property. You will pay council tax instead.

If you hire out your holiday home for more than 140 days a year or you provide bed-and-breakfast for more than six people at any one time, you will have to pay non-domestic rates. You will also pay council tax on the part of your property you use as your home.

1.5 Are any non-domestic properties exempt from Non-Domestic rates?

Some types of property are exempt from entry in the Valuation Roll. This means that these properties are not liable to pay non-domestic rates. Some examples of exempt properties include:

• Agricultural land and buildings
• Fish farms, fishing, and sporting rights (your local fishery board may request that the Assessor values salmon fishings but only for its own purpose)
• Public parks
• Sites of Automatic Telling Machines (ATMs) in rural settlements
• Oil and Gas Pipelines
• Diplomatic Missions
• Overseas Armed Forces in the UK

The above list is not exhaustive and your local Assessor will be able to tell you whether or not the property you occupy is exempt from valuation. Other types of property whilst appearing in the Valuation Roll are also fully or partially exempt from payment of rates. This is dealt with in part 2 below.

1.6 How much will I have to pay?

Councils are responsible for issuing rates bills to the occupiers of non-domestic properties in their local authority valuation area. Non-domestic rates are levied on the basis of a national poundage rate multiplied by the rateable value of the property you occupy. The standard poundage rate (paid by businesses with a rateable value of £29,000 or below) is 48.1 pence in 2009-10. The amount you have to pay may be reduced, however, subject to eligibility for other relief schemes, see part 2 below.

If you are the rateable occupier of a property with a rateable value in excess of £29,000 then you will be required to pay a supplement on the poundage rate to contribute towards the costs of the Small Business Bonus Scheme. The supplement on the poundage rate for 2009-10 is 0.4 pence (resulting in a higher total poundage rate of 48.5p in 2009-10).

1.7 When does the poundage rate change?

The national poundage rate is set annually by the Scottish Ministers and covers the period 1 April to 31 March.

1.8 How often do revaluations take place and why do we have them?

A revaluation of Non-Domestic subjects in Scotland is carried out every five years by the Scottish Assessors. This results in the production of new Valuation Rolls, for each local authority valuation area, which contain revised rateable values for all non-domestic subjects. The principal purpose of a revaluation is to ensure that the distribution of the rates burden between ratepayers remains equitable. The Valuation Rolls are maintained by the Assessors on a rolling basis and new updated Valuation Rolls are compiled annually.

The next non-domestic rates revaluation is planned to take effect from 1 April 2010.

1.9 What about the change in the poundage rate following a revaluation?

Following a revaluation, the poundage rate may be lowered or raised depending on the overall rise or fall in rateable values between revaluation periods.

PART TWO: PAYING YOUR BILL

2. In this section we will tell you about:

• when to expect your bill;
• types of relief;
• what may happen if you don't pay your non-domestic rates bill.

2.1 When will I get my bill?

You will normally receive your bill from your local council in March or April. It will tell you the amount you have to pay in the coming year and how the council has worked out that amount. Rates are normally payable in 10 instalments commencing in May and ending in February. However, your Council may offer alternative payment arrangements.

2.2 Do I qualify for any other relief?

There are a number of rate reliefs available. We can only explain them briefly here. Further information on rate reliefs can be found within the non-domestic rates section of the Scottish Government website. www.scotland.gov.uk/businessrates.

If you think you may qualify for any of these rate reliefs, you should contact your local Council's Finance Department. Contact details for each Council can be found here

Small Business Bonus Scheme - From 1 April 2009, if you are a ratepayer who occupies or is entitled to occupy one or more non-domestic properties which have a combined rateable value of £15,000 or less then you may be eligible for a discount of between 25% and 100% on the rate poundage. Further information on the Small Business Bonus Scheme is explained in the Small Business Bonus Scheme 2009-10 leaflet which can be found within the non-domestic rates section of the Local Government website: Small Business Bonus Scheme

The Small Business Bonus Scheme has replaced the former Small Business Rates Relief Scheme, which operated until 31 March 2008.

Property empty and unused - The Empty Property Relief scheme grants 100% mandatory rates relief to properties which are empty for the first 3 months and 50% discount thereafter. However, for some properties such as industrial and listed buildings and properties with rateable values of less than £1,700 there are no rates to pay even after the first 3 months.

Part of your property is not being used and is completely unoccupied for a short time - Your local council may consider giving you relief, if they decide you are entitled to it, and reduce the payment on the part of your property that is clearly unoccupied and beyond use for a short period of time. Your local council can choose to ask the Assessor to divide the current rateable value between the parts of the property that are occupied and those which are not occupied. If your application for this rate relief is successful, you will pay full rates on the occupied part of the property and 50% in respect of the unoccupied part.

Charities: Where your organisation is a registered charity, listed on the register maintained by the Office of the Scottish Charity Regulator (OSCR), and the property occupied by your organisation is used "wholly or mainly for charitable purposes", you may be entitled to 80% mandatory rates relief. It is up to each council to determine whether a property is being used "wholly or mainly for charitable purposes". Your council also has discretionary powers to top this relief up to 100%.

Not a charity but is another type of non-profit-making organisation - You are not automatically entitled to relief, but councils have discretionary powers to grant up to 100% rate relief. To qualify, your organisation must be charitable, religious, or concerned with education, social welfare, science, literature or the fine arts, or the property must be used by a non-profit-making organisation and used wholly or mainly for the purpose of recreation.

Community Amateur Sports Clubs registered with HM Revenue and Customs: You may be entitled to 80% mandatory rates relief. Your council also has discretionary powers to top this relief up to 100%.

Your sports club is a registered charity listed with the Office of the Scottish Charity Register (OSCR). You may be entitled to 80% mandatory rates relief. Your council also has discretionary powers to top this relief up to 100%. (see charities above)

Sports clubs that do not meet the requirements for mandatory rates relief may be eligible for up to 100% discretionary rate relief from their local authority. (see non-profit-making organisations above)

Your business is in a rural settlement with a population below 3,000, and in an area designated as rural by Scottish Ministers - The types of business that qualify for this relief are:

• the only general store or post office with a rateable value of £7,000 or less;
• a food shop with a rateable value of £7,000 or less;
• the only public house/small hotel (with appropriate licence), with a rateable value of £10,500 or less; or
• a petrol filling station with a rateable value of £10,500 or less.

These premises may be entitled to mandatory 50% rate relief, with councils having discretionary powers to top this relief up to 100%. Councils also have discretionary powers to grant up to 100% rate relief to properties with a rateable value of £14,000 or less, used for purposes which are beneficial to the local community.

Stud Farms - The rateable value of lands and heritages which comprise or include buildings used for the breeding and/or rearing of horses and occupied with agricultural land or agricultural buildings should be ascertained by making a deduction from what would otherwise be the rateable value. The deduction is made from the value of the whole property by the local assessor to reflect how much of the property is used as a stud farm. The maximum amount of the deduction the assessor can make is determined by the Scottish Ministers by order and currently stands at £3,500. Additionally, stud farms newly established on or after 1 April 2003 are eligible for discretionary rates relief if the rateable value amounts to £7,000 or less.

Severe Hardship relief: If you are suffering severe hardship and you cannot pay your Non-Domestic Rates bill, you should contact your local council. Your local council may decide to give you up to 100% rates relief - the decision is up to them. They normally only do this in extreme cases of hardship, for businesses which are particularly important to the local community and where a one off assistance will resolve the difficulties. This takes account of the fact that local council tax payers will cover part of the cost of the relief. Any decision to grant hardship relief by the local council has to comply with State aid rules. State aid rules allow for the granting of public sector assistance of up to €200,000 (approximately £175,000) over a rolling 3 year period (the de minimis limit for State aid).

Disabled Persons relief: Up to 100% Rates relief may be available if:

• Residential accommodation is provided for the care or aftercare of people who are ill,
• Facilities are provided for the training of people;
• Welfare services or workshops for disabled persons are provided.

2.3 What if I can't afford to pay my bill if I think it is wrong?

If you feel you cannot pay the bill or any of the instalments, or if you think the bill is wrong for any reason , you should contact your council straight away (but you should still continue to make your payments). If you are having problems, the council may be able to help by changing the amounts and dates of your payments.

2.4 What if I don't pay?

Do not ignore your bill - If you do not keep your instalments up to date, you may lose the right to pay by instalments in which case the full year's charge will become immediately payable. In these circumstances your council will inform you of this and, if full payment is not made as requested, the council may institute legal proceedings against you. This may be by summary warrant, which, amongst other things, results in an additional 10 per cent being added to the amount due to cover administrative costs. If you are having difficulty in making payment, you should contact your council to discuss alternative payment arrangements.

The following link: Dealing with Debt
takes you to the Scottish Government website and an information booklet " Dealing with Debt: finding your feet."

PART THREE: RATEABLE VALUES AND APPEALS

3. In this section we will tell you:

• What your rateable value means; and
• What you can do if you think your rateable value is wrong.

3.1 What is a rateable value?

Apart from properties which are exempt from valuation, each non-domestic property has a rateable value. The Assessors set the rateable values. In carrying out this function, the Assessors are entirely independent of both local and central government and reach decisions on rateable value in accordance with applicable statute and case law.

The rateable value broadly represents the yearly rent the property could have been let for on the open market on a particular date. For the revaluation that came into effect on 1 April 2005, this date was set at 1 April 2003. For the next revaluation, the valuation date was 1 April 2008 and the revaluation is planned to take effect from 1 April 2010.

3.2 My rateable value is nothing like the rent I pay?

The rateable value is the Assessor's assessment of what your property would fetch in rent if it was available on the open market on a particular date. It may be different from the rent you pay for a number of reasons, for example, your own rent may have been set at a different time.

3.3 I have received a form from my local Assessor asking lots of questions about my property - what is this?

Your local Assessor's Office may send you a form to fill in. The Assessor uses the information you give on this form to help him value your property and others. Assessors can send you a form at any time, but they are most likely to send you one during the run-up to a revaluation.

By law, if you receive a form, you must fill it in and return it to the Assessor. If you do not, you may incur a penalty.

The information you give the Assessor on the form will help to make sure that the valuation of your property, and other similar properties, is accurate, and that your rates bill is correct. This may avoid the need to appeal later on.

3.4 How can I find out what my rateable value is?

Your rateable value will be shown on your business rates bill. You can also find out your rateable value from any of the following:

• Your local Assessor's Office ( see below for contact details)
• Online, using the Scottish Assessors Association portal: www.saa.gov.uk
• Your Local Library (some areas)
• The non-domestic rates section at your local council ( see below for contact details)
• Your rating advisor (if you have one)

3.5 What if I think my rateable value is wrong?

If you think your rateable value is wrong, you can appeal. Before appealing you may, if you wish, contact the Assessor's office to discuss your valuation informally. Contact details are available here

PART FOUR: CONTACTS

4. In this section we will tell you about:

• Where to get more advice; and
• Employing a rating advisor

4.1 Who should I contact for more information?

Scottish Assessors

Details about rateable values of non-domestic subjects in Scotland can be found on the Scottish Assessors Portal www.saa.gov.uk

For more advice about the valuation of your property or how to appeal against a rating assessment you should contact your local Assessor. Contact details are available here.

Local Councils

If you have any questions about your rates bill (excluding the rateable value figure which is obtained from your local Assessor or from the website www.saa.gov.uk), or whether you might be eligible for some form of rate relief, you should contact your local council. Contact details are available here. If telephoning the council you should ask for the business rates section.

4.2 Should I employ a rating advisor?

Please take care if you are considering seeking independent advice on valuation matters. Members of the Royal Institution of Chartered Surveyors (RICS) and the Institute of Revenues, Rating & Valuation (IRRV) have produced information on combating "cowboy" business rates advisors and are regulated by rules of professional conduct designed to protect the public from malpractice and are required to hold adequate professional indemnity insurance.

Rating consultancy is a specialist service provided by some members of RICS and the IRRV. Membership of the Rating Surveyors Association (RSA) is restricted to members of the RICS with a minimum of 5 years' experience. These bodies have agreed a Rating Consultancy Code of Practice which sets the standards which a member should follow in relation to handling a non-domestic valuation appeal. Further information can be obtained by telephoning 0870 333 1600.