‘Real terms’ cap means 14.75% ceiling on increases
By Matthew Lynas
Finance secretary Derek Mackay
ON-TRADE operators awaiting business rates relief under the Scottish Government’s cap for the hospitality industry have been urged to contact their local authority to ensure the discount is applied to their bill.
The one-year cap, unveiled by finance secretary Derek Mackay on February 21, is being administered by councils, with the Scottish Government confirming its rates relief scheme “must be an application-based scheme to comply with European Union state aid rules”.
The Scottish Government also confirmed that the 12.5% cap is to be applied in “real terms”, which when factoring in RPI inflation, puts a 14.75% ceiling on non-domestic rates bill increases. The spokesman added that the Scottish Government was “clear from the outset – on the day it was announced to parliament” that the 12.5% cap “was a real terms cap”.
The “real terms” component of the cap was not mentioned by Derek Mackay in his February 21 statement to the Scottish Parliament, however it was included in a business rates background document published on the same day.
Harry Hood of Lisini Pub Co said he was unaware that operators would be required to apply for the rates relief from their local authority, and was not aware the 12.5% cap was being applied in “real terms”, resulting in a 14.75% limit on increases.
“I speak to the assessors a lot and they didn’t know [how the rates cap would be implemented],” said Hood.
Paul McDonagh, of Glasgow’s Bon Accord pub, said he had received a letter from Glasgow City Council informing operators they would need to apply for rates relief and to await a further letter. McDonagh said he had been unaware that the 12.5% increase was tied to RPI inflation, but added that the rates increase cap of 14.75% was “a lot better than it would have been” without the relief scheme.
Willie Macleod, executive director for Scotland at the British Hospitality Association (BHA), suggested hospitality business owners “talk to the finance department” at their local authorities to ensure the cap is applied. Advice on how operators can apply for the rates cap is currently not available on a majority of council websites.
Guidelines on implementing the rates cap were provided to local authorities on March 16, giving them just over a fortnight before the new rateable values came into force on April 1.
Macleod said he did not believe local authorities “have had much time since parliament approved this”.
A Scottish Government spokesman said that while it is for councils to administer the rates relief scheme, “we anticipate that businesses will be able to apply for the relief and have this applied to their bills before they have to pay any portion of their business rates”.