Increase in business tax rates will hit Scotland today

?An increase in business tax rates in Scotland will add £13.2 million to retailers’ rates bills at a time when retail sales are sluggish and one in eight shops in Scottish town centres is vacant, the Scottish Retail Consortium has warned.

The rate north of the Border will rise from 48 per cent to 49 per cent today, having been 40.7 per cent at the start of the decade.

UK-wide, the retail sector has seen a drop of 48,000 jobs between 2017 and 2018 even though the economy as a whole added 415,000 new jobs over the same period.

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The SRC added that today also marks the start of the fourth successive year when Scotland’s Large Business Rates Supplement is higher than it is in England. This affects 5,065 shops in Scotland, at an extra annual cost of £14.m. Retail accounts for a fifth of the rates paid to the Scottish Government.

Christmas shoppers on one of the very busiest days of the year.
Christmas shoppers on one of the very busiest days of the year.

David Lonsdale, director of the Scottish Retail Consortium, said: “Headway is being made on rates reform in Scotland, however that progress is uneven and the overall burden of business rates remains onerous at a time when one in every eight shops in our town centres is vacant. The cumulative burden of tax and regulatory costs has mushroomed and is accelerating the pace of change within the industry, as retailers reinvent themselves in the face of profound changes in shopping habits.”

He added: “A medium term plan to lower the rates burden is urgently needed, coupled with restoration of the level playing field with England on the large firms’ supplement. This would increase retailers’ confidence about investing in new and refurbished shop premises.”

A raft of retailers have recently announced cutbacks in their physical stores, hit by a combination of declining consumer confidence and the rise of online shopping.

Earlier this month, high street stalwart Gap said it was to close 200 stores UK-wide, while Marks & Spencer said in January that it was going to shut its East Kilbride and Kirkcaldy branches. Its stores in Falkirk and Greenock have already closed down.

Business rates are calculated by multiplying the ratebale value of a business property by the multiplier.