The Scottish Beer and Pub Association has welcomed the one year cap on business rate increases in Scotland for the hospitality sector, at 12.5 per cent, as announced by the Scottish Government.
The SBPA had urged the Scottish Finance Secretary Derek MacKay to introduce the cap, following concerns over the impact of the revaluation of business rates on some Scottish pub businesses.
The SBPA’s analysis suggests that the cap will save Scottish pubs around £6 million, with pubs standing to benefit by an average of £4,700.
Despite welcoming the move, the SBPA stresses the importance of ensuring that the Scottish Government delivers clarity for the sector in year two and beyond, after the expiry of the cap, as some Scottish pub businesses are set to see their rateable value increase by much more than 12.5 per cent.
Clarity is also needed, the SBPA says, over whether Scottish pubs that saw their rateable value increase, but which were previously paying no business rates at all, will be liable to pay business rates under the new cap.
Currently, for every £1,000 of turnover, the hospitality sector in Scotland pays over £30 in business rates. This is over three times more than every other sector, and 258 per cent higher than the average. Whilst welcoming the Scottish Government’s announcement, the SBPA also reiterated its support for the continued work of the Barclay Review, which has been set up to develop a sustainable business rates system that does not disadvantage the Scottish pub sector.
Brigid Simmonds, SBPA Chief Executive, comments:
“The introduction of a business rates cap, set at 12.5 per cent, is welcome, and shows that the Scottish Government has listened to the concerns of Scottish pubs and other hospitality businesses. Scottish pubs fall under the same methodology as hotels for business rates, being assessed on hypothetical turnover, as opposed to square footage, and so it is right that the cap should cover the broader hospitality sector.
“Pubs pay a disproportionate share of business rates in Scotland, and some pubs were facing huge increases with bills due to go out in just a few days time. Whilst we appreciate action from the Scottish Government, they must go further, and offer the sector clarity on what happens after the one year cap expires.
“This cap will give the Scottish Government an opportunity to reflect on how business rates in Scotland work for the pub sector. We need a system of relief that is specifically tailored to help Scottish pubs, and so continue to offer our support to the ongoing Barclay Review.”