Scottish Budget: property industry welcomes business rates review but says empty rates changes on industrial property are a tax on investment

16 Dec 2015

Policy area: Taxation

Scotland’s property industry has welcomed an announcement in today’s Budget that the government will launch a review of the business rates system.   

The Scottish Property Federation (SPF) is concerned, however, that planned changes to empty property rates for industrial properties and the level of relief for other properties in the initial 3 month period when a property has fallen empty.

The SPF has long called for a fundamental review of the business rates system, which it has said is outdated, unresponsive and does not reflect Scotland’s property market. 

David Melhuish, director of the Scottish Property Federation, commented: “For years, we have been advocating significant reform of the business rates system, alongside a number of other bodies. The business rates system has existed in its current form largely unchanged for some 26 years and the postponement of the revaluation and increase in tax burden demonstrates that the system is ripe for review.  

“The change to empty property rates relief on industrial properties is worrying though – it is effectively a tax on industrial development and investment.  This is a sector that shows good demand but we will fail to capitalize on this business interest if we make the speculative development of new industrial properties too risky, not to mention penalising struggling industrial businesses and landlords in a still fragile sector of the economy.

“We look forward to engaging positively on the review of this key business tax which must become more responsive to changes in the economy.”