In light of the decision taken in its draft Scottish Budget 2026-27 to provide a smaller business rate discount for retail and hospitality …

The draft Scottish Budget 2026-27, announced on 13 January, ensures the estimated revenues raised from non-domestic rates in 2026-27 will be 6% lower in real terms measured by the Consumer Price Index than pre-COVID despite the number of properties on the valuation roll increasing in that time. It continues to support businesses and communities, with a strong non-domestic rates package, which decreases the Basic, Intermediate and Higher Property Rates in 2026-27, delivering the lowest Basic Property Rate since 2018.The non-domestic rates liability that applies to a property depends on the interaction between its rateable value, the tax rate that applies and any reliefs that it is in receipt of. Total rateable value (local list) is expected to rise by 19% at the 2026 revaluation in England but only 12% in Scotland.By way of example, shops are expected to see an increase in total rateable value of 6% in Scotland and 10% in England. Hotels’ total rateable value is expected to rise by 28% in Scotland but 79% in England, while for pubs this is 15% in Scotland but 30% in England. For restaurants the overall increase is expected to be 8% in Scotland while the total rateable value increase of restaurants and cafes in England is expected to be 15%.Given this context, the 15% relief available to retail, hospitality and leisure properties on the basic and intermediate property rate in Scotland compares favourably to the effective 10%-12% support available in England through the lower tax rate announced at the UK Budget.For those properties that do see increases in their Rateable Value, the Budget offers more than £320 million of support through transitional relief schemes and retail hospitality and leisure relief over the next three years.Businesses and communities will be supported with a generous non-domestic rates relief package worth an estimated £864 million in 2026-27, including the Small Business Bonus Scheme which remains the most generous scheme of its kind in the UK and is confirmed for the next three years, as well as transitional relief schemes.Recognising the challenges faced by the retail, hospitality and leisure sectors, for the next three years we will offer 15% relief for eligible properties in these sectors liable for the Basic or Intermediate Property Rates, capped at £110,000 per business per year; and extend and expand 100% relief for the next three years to retail, hospitality and leisure 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 per year.We estimate that 96% of retail, hospitality and leisure properties could benefit from some form of relief in 2026-27.Taken together around 89,000 properties (or 96%) across the three sectors could benefit from zero or reduced rates and the budget guarantees that support for the full three years of the revaluation.We are considering the announcement made by the Chancellor on 27 January offering additional support on business rates for pubs in England and are committed to passing on any consequentials in further support to business.Scottish Government support Business Investment Districts (BIDs) as a model to help leverage local investment, encourage innovation, unlock opportunities, and deliver sustainable change and improvement for local places. We fund Scotland’s Improvement Districts (SIDs) as the National Centre for Improvement Districts in Scotland to provide advice and governance support for BIDs in Scotland. We also provide seed corn grant funding to support the initial development of new BIDs, subject to budget availability.BIDs are independent, business led partnerships that are established through a democratic ballot of local businesses. Their programmes of work are funded through a BID levy paid by local businesses within the BID area.