Scottish leaders call for business rates reform as firms warn of rising costs
Business rates pressure grows
Scottish political leaders have called for an overhaul of business rates after a Glasgow live music bar said it may have to cut staff to cope with a near six-fold increase in the tax.
Wunderbar, which operates two venues in Glasgow and employs 130 staff, told BBC Scotland News that the business rates bill for its city centre bar is rising from £111,000 a year to £645,000. Operations manager Gavin Boyle said the company would have to lay off staff to absorb a rise of more than £500,000.
Boyle described the increase as "completely untenable" and said businesses could not simply pass all of the extra cost on to customers. He said the rise was coming alongside higher energy costs, fuel duty and an increase in the minimum wage, warning that if similar rises continued across Scottish hospitality, the industry could lose tens of thousands of jobs.
Why bills are rising
Business rates, known in Scotland as non-domestic rates, are set by the Scottish government and collected by councils to help fund local services. The levy applies to properties such as shops, offices, factories and warehouses, and is based on rental value.
From 1 April, new rateable values came into force for all 260,000 rated non-domestic properties in Scotland, leading to higher bills for many firms. Boyle said Wunderbar already pays for street cleaning and lighting outside its venues and questioned what businesses were getting in return for high tax bills.
He also called for the Scottish government to mirror a pause on business rates revaluations introduced in Northern Ireland.
Relief measures and political response
In its Budget, the Scottish government said all three bands of business rates would be cut from 1 April to cushion the impact of revaluations. Transitional relief measures are also being introduced, including an extension of the Small Business Bonus Scheme, which gives some firms up to 100% tax relief.
Rates relief of up to 40% is available for some retail, hospitality and leisure businesses with properties that have a rateable value of up to £100,000. Hospitality businesses on islands or in certain remote areas can also receive 100% relief, capped at £110,000 a year.
The Scottish Retail Consortium has estimated that medium and larger shops in Scotland will pay £54m more in business rates than their counterparts in England during this financial year.
Leaders set out competing plans
First Minister John Swinney said his government had introduced more than £900m of transitional relief on business tax and argued that many businesses would see reductions. Asked about firms such as Wunderbar that are not entitled to relief, he said rateable valuations were determined by independent assessors and that the government provided support where it could.
Swinney said Scotland was facing "very significant" financial pressures and argued that the UK government needed to provide help to people immediately rather than later in the year. He also pointed to wider cost-of-living pressures, including higher fuel prices and energy bills.
Other party leaders also used the issue to set out their election pitches. Scottish Conservative leader Russell Findlay said higher business rates would force some companies to close and said his party would scrap town-centre parking charges. Scottish Labour leader Anas Sarwar said the current system was broken and pledged reform, including appointing a chief assessor and changing a system he said was weighted against hospitality.
Scottish Green co-leader Ross Greer also backed an overhaul, saying the system favored larger companies. Reform UK’s Malcolm Offord said his party would reverse the increases and phase out business rates over time. Scottish Liberal Democrat leader Alex Cole-Hamilton said his party wanted greater transparency around rises and longer-term reform based on land values.
Cost-of-living backdrop
The debate came on a day when council tax, phone and other household bills rose for many people in Scotland. Cost-of-living pressures were identified in a recent Savanta survey for BBC Scotland as the top priority issue for voters ahead of the Holyrood election.
While the Scottish government has some tax and welfare powers, Westminster has greater financial capacity. The pressure on household and business finances has also been intensified by rising energy and fuel costs linked to international events, adding to concerns that a new cost-of-living crunch is developing.