What economic impact analysis it has undertaken regarding the licensed hospitality sector in relation to the limited non-domestic rates rel…

The Budget 2025-26 freezes the Basic Property Rate for properties with a rateable value up to and including £51,000, delivering the lowest such rate in the UK for the seventh year in a row. It also provides a package of non-domestic rates reliefs worth an estimated £731 million, including the most generous small business rates relief in the UK, a 40% relief for hospitality premises liable for the Basic Property Rate, capped at £110,000 per business, and a continuation of 100% relief for hospitality premises located on islands as defined by the Islands (Scotland) Act 2018, and in prescribed remote areas (Cape Wrath, Knoydart, and Scoraig), capped at £110,000 per business.Based on Scottish Government analysis, using the non-domestic rates valuation roll and a snapshot of councils’ billing systems, Hospitality Reliefs in Scotland could benefit up to 13,000 properties, including up to 5,000 hotels, public houses and restaurants. Of these, we estimate that this relief, in combination with existing reliefs, could allow up to 300 hotels, public houses and restaurants to pay no rates at all in 2025-26 with up to 300 more benefiting from the 100% relief for hospitality premises in island and specified remote areas.The precise number of premises that will benefit from these measures will depend on take-up of the relief and the ways in which businesses with more than one eligible property choose to claim relief in cases where the value of their relief is limited by the £110,000 per-business cap.Further information on impacts with respect to the 100% relief for hospitality premises on islands and in specified remote areas has been published in an Island Community Impact Assessment which is available at: https://www.legislation.gov.uk/ssi/2025/40/resources.There are a number of factors which make it challenging to estimate the full economic impact of non-domestic rates relief. These include:?where a relief is available nationwide comparisons with a control group of similar non-domestic properties would be limited by important differences, such as being a different property type or being outside of Scotland, allowing few meaningful comparisons;differences in the characteristics of businesses and organisations eligible for a particular relief;the unpredictability of the behavioural response to any changes in tax liabilities;the effects of a relief on businesses or organisations that have multiple properties, not all of which qualify for a given relief, or may be subject to the cap on the overall value of relief;difficulties in matching non-domestic rates valuation roll data to business level datasets to understand the effects of a relief on businesses economic outcomes and behaviour makes a business-based analysis resource intensive.