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(Image: GT)
Scottish firms face a “postcode lottery” when attempting to access more than 20 business rates relief schemes, according to new research which reveals major variations in how support is administered across the country.
New research by the Federation of Small Businesses (FSB) has found there are 22 different types of non-domestic rates relief available in Scotland, which often require multiple applications from small firms who qualify for a range of protections.
Many of the reliefs have been introduced in recent years to cushion firms from steep rises in business rates following the periodic revaluation of non-domestic property.
However, research by the FSB found that there is no uniform application process, inconsistency in the applications of reliefs, and gaps in the information provided to businesses by local authorities.
The FSB declared that the current system is “overly complex, difficult and time-consuming to navigate, when it needs to be simple and user-friendly to ensure bills are calculated correctly”.
The findings coincide with the launch of The Herald’s launches campaign for reform of Scotland’s business rates system, with asks including the creation of a national business rates assessor to avoid regional disparities within Scotland.
This echoes the call from the FSB for the Scottish Government to streamline the system, including by reducing the number of business rates assessors from 14 to one, as part of its public sector reforms.
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- Reset The Rates: Six reforms to fix Scotland's broken business rates system
- 'Postcode lottery' leaves Scottish firms lost in business rates maze
- Who's backing The Herald's campaign to reform Scotland's business rates?
The campaign is supported by the FSB and a wide range of other industry bodies and business leaders.
Research by the group has found a huge variation in the way reliefs are applied by the country’s 32 local authorities. Guy Hinks, Scotland chair of the FSB, said: “Trying to navigate the myriad different rates reliefs and work out which apply to your business can be hugely time-consuming and complicated. It can feel like getting lost in a giant maze.
“Rates relief is not a handout to small businesses. It is recognition that a property-based tax can bear disproportionately heavily on firms with the least capacity to absorb high fixed costs and can be the difference between a viable local business and another empty unit.
“A comprehensive and effective system of rates reliefs is vital to a healthy Scottish economy to protect local jobs and businesses.”
The FSB research found:
• No uniform application process for business rates reliefs
• The same relief automatically applied by some councils but not others
• Frequent gaps in readily available information for small firms
Guy Hinks, Scotland chair, FSB (Image: FSB)
Mr Hinks added: “Our team regularly helps small business owners struggling to navigate the reliefs system, including one who had to complete three applications for four reliefs to be applied, yet still faced a bill of more than £1,000 rising to three times that by 2028.
“A small business should not be expected to navigate more than 20 reliefs and make multiple applications to access the support for which it is eligible. The system needs to be dramatically simpler.”
Colin Borland, Scotland director of the FSB, told The Herald that a “patchwork” of reliefs had arisen because of a need to smooth out sudden increases in rateable values, including after the most recent revaluation.
“The problem with that is, as soon as you patch over one place, something else pops up,” he told The Herald. “There is now something like 22, the last time we counted, different reliefs. [There is a] patchwork of reliefs right across the country.
“That is not helped by the fact they are administered locally, so they way that you apply for them is different [in different parts of the country]. Sometimes what they are called is different. Some of them are applied automatically, some are knocked off the gross, some come off the net. It is difficult for rate payers to work out exactly what they should be paying.
“Indeed, when members come to us and we have tried to take up their cases for them, we have people who do this for a living, and they are spending the best part of an afternoon working out what an individual member’s liability is going to be.
“If you are a busy small business and thinking about how you are going to make the staff wages by the end of the week, how you are going to make the VAT quarter or make that sale, how on earth have you got time to look into it?
“We have saved members thousands of pounds, and if they hadn’t come to us, they would either have gritted their teeth and had to pay it, or worse – cut elsewhere in the business so they could afford it.
“If that is just what we are seeing through our door this must be the tip of the iceberg. It is shocking to think of just how much money is being overpaid by businesses to government just because of the complexity of the system.”
The Scottish Government is providing £763 million of business rates relief in the 2025-2026 financial year. The biggest element is the Small Business Bonus Scheme which, at a cost of nearly £260m, ministers say is the most generous of its kind in the UK. Under the scheme, firms operating from a single property with a rateable value of £12,000 or less are eligible for 100% rates relief.
Relief then tapers from 100% to 25% for properties with a rateable value between £12,001 and £15,000, and from 25% to 0% for properties valued between £15,001 and £20,000.
Around 100,000 business properties benefit from the scheme. However, the FSB argues that its value has been eroded over time because the qualifying thresholds have not increased in line with inflation, meaning fewer businesses now qualify for support.