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The Scottish Finance Secretary, John Swinney, has presented the SNP’s first budget since the referendum on Scottish independence. Mr Swinney has taken advantage of powers devolved to Scottish Government to introduce two new taxes – the Land and Buildings Transaction Tax and the Scottish Landfill Tax – and has also made some important announcements regarding business rates.
The Finance Secretary has announced that the business rate poundage in Scotland will increase at no higher rate than that in England. This is a significant announcement for ratepayers. The Unified Business Rate multiplier in Scotland is not capped by legislation to a maximum increase, as is the Uniform Business Rate in England, and it would be open to Scottish Government to increase the multiplier by more than RPI inflation. The multiplier in England normally increases in line with the September Retail Prices Index (RPI) measure of inflation, due to be announced next week. Last year the English UBR was capped at a 2% increase, despite a 3.2% rate of RPI inflation. The announcement from Mr Swinney suggests that Scotland will match any equivalent cap in England this year.
The Budget announcement also confirmed that the “Public Health Levy”, a business rates levy on large retail properties selling both cigarettes and alcohol, would end at 31 March 2015. This levy has been in place for three years and applies to retail properties with a Rateable Value of £300,000 or more which are both licenced to sell alcohol and registered for the sale of tobacco – making it effectively a special rates levy on large supermarkets as very few other properties fulfil all these three criteria. The levy was introduce in 2012/13 at 9.3p and is now at 13p, making it an addition of about 27% to the normal rates liabilities for those properties to which it applies. There are no equivalent rates levies in England or Wales. The nearest equivalent is the large retail properties rates levy in Northern Ireland and this will also end in 2015.
The business rates announcements in the Scottish budget will be welcome ones to taxpayers. However it is clear that the Scottish Government has not lost the peculiar addiction that all UK governments seem to have to property taxes and the Land and Buildings Transaction Tax, introduced in the same budget, looks likely to prove a considerable drag on the Scottish property market.
