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Rate Relief for Small Businesses: Consultation Paper

PART 3: EXTENSION TO THE PROVISIONS FOR RURAL RATES RELIEF

3.1 At present, both north and south of the Border, a rural rate relief scheme is in operation. This provides 50% mandatory relief for any sole general store (selling food and household goods) and/or post office in settlements of under 3,000 population in a designated rural area and with a rateable value of less than £6,000. Local authorities have discretionary powers to top this up to 100% for any other business in such settlements that they consider important to the community. The discretionary element is for subjects with a maximum rateable value of £12,000.

3.2 There is continuing concern about the decline in services in small rural communities. Recent concerns have focused on three areas where there is particular evidence of decline:

• Public houses which can be an important focus for communities, particularly where other facilities such as shops and post offices have closed, and may provide specific community facilities such as meeting rooms or children’s play areas.
• Garages and petrol filling stations in rural areas. Rural residents are more dependent on their cars for travel and garages may also provide other facilities (shops, cash facilities) in an area where these are not otherwise provided.
• Small (particularly food) shops that are not the sole shop in settlements under 3000.

3.3 All of these types of business are currently eligible for discretionary rate relief under the existing scheme. The Scottish Executive's proposals for rate relief for small businesses generally will provide further assistance. However, we are also considering whether additional mandatory rate relief for those businesses providing important local services would help to sustain communities and reduce social exclusion. (Similar proposals are being considered for England and Wales).

Options for extending the relief

3.4 We would welcome views on whether we should extend the mandatory 50 per cent rate relief in designated rural settlements of less than 3000 population, to the following premises:

• singly owned pubs where the pub is either the sole remaining retail outlet or it is the sole public house and provides a defined community facility or service (eg cash machine, cashback facility, meeting room for local community, or public information and communication technology access point) where they have a rateable value of less than £6,000;
• shops selling mainly food where they have a rateable value of less than £6000;
• singly owned garages offering a cash machine or cashback facility where there is no post

office and where they have a rateable value of less than £6,000. Indeed consideration could be given to including all singly owned garages in designated rural areas.

3.5 In addition to the options at 2 above, there might be a case for exempting cash machines (ATMs) located in designated rural areas from non-domestic rates. At present, ATMs are entered in the valuation roll as separate lands and heritages with the valuation based on the volume of transactions. The machine itself is not rateable but the site of the machine is and is generally held under a lease agreement between the financial institution and the host building. ATMs which are part of a bank or building society are not entered separately in the roll but are valued as part of the bank or building society.

Costs

3.6 Although it is difficult to be precise about the additional costs of introducing the proposed extension to the rural rates relief scheme, it is unlikely that the cost would be prohibitive. A rough estimate of the number of Scottish properties involved and an estimate of the costs which would be incurred is set out below:

Legislative position and timing

3.7 These proposals will require new Primary legislation in Scotland. Following consultation the intention would be to include suitable legislative provisions in a future Local government Government Bill.

EXTENSION TO RURAL RATES RELIEF SCHEME: POINTS FOR CONSIDERATION

The Scottish Executive seeks views on:

• the proposal to extend the provisions of the rural rates relief scheme;
• the categories of property proposed for inclusion in the scheme;
• whether cash machines (ATMs) located in designated rural areas should be exempt from non-domestic rates;
• the terms of the scheme and £6,000 threshold.

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