Scotland’s Finance Secretary Shona Robison unveiled her Budget for the year ahead yesterday (4 December), which included a proposal to implement a 40% non-domestic rates relief package for hospitality businesses paying the ‘basic property rate’, meaning those with a rateable value up to £51,000.
It will also freeze the rate for those properties at 49.8p; and additionally provide 100% relief for businesses on the Scottish islands.
However, while industry voices say the support will be beneficial to those who are eligible, they point out that thousands of businesses will miss out and now face a ‘double-whammy’ of increased employer taxes, as announced in the Westminster Budget, and an inflationary rise in their higher level of business rates in April.
According to UKHospitality, 2,600 Scottish hospitality businesses will be impacted.
“The introduction of 40% business rates relief is very positive for venues that are eligible for this support,” says Leon Thompson, executive director of UKHospitality Scotland.
“With costs mounting for venues across Scotland, this support could be a lifeline for some businesses making tough decisions about whether to invest, take on more staff, or even shutting the doors for good.
“However, there are around 2,600 businesses that will not be eligible for relief.
“This will seriously threaten their ability to support jobs and we have to recognise that these businesses employ more than half of Scotland’s hospitality workforce.
“Hospitality’s ability to provide jobs for everyone is one of our impactful contributions to Scotland and I am concerned about the unintended consequences those tax rises will have on the ability of those unsupported businesses to support employment.
“I’m grateful that the Scottish Government has acted to introduce relief and I look forward to continuing discussions with them throughout this Budget process, including on how we can ensure major employers in hospitality are supported.”
Many businesses ‘teetering on the precipice of closure’
The SLTA (Scottish Licensed Trade Association) dismissed the rates relief as being ‘made in a way to catch headlines’ and describes the level of support as ‘unfair and discriminatory’.
“Yes, we are delighted for those getting the relief, but because we are rated on turnover and profit is not taken into account, many relatively small businesses in our trade are above the £51,000 threshold,” says Paul Waterson, the SLTA press spokesperson.
“This means many licensed premises above the cut-off point are now wondering if they will survive.
“There are still many businesses teetering on the precipice of closure with recent figures suggesting that 20% of UK pubs and bars are technically insolvent and other data said there was no profit in 80% of hospitality outlets in the UK.
“Closure rates in Scotland have been running at over double the rate of that in England.”
Working in partnership with the Scottish Beer and Pub Association, the SLTA has called for the introduction of a ‘permanent non-domestic rates licensed hospitality-specific multiplier’ of 35p, which it says will encourage investment, help revitalise high streets, and rebalance the disproportionate business rates burden.
“This would end the sticking-plaster policies that only provide temporary relief for some businesses that bring life to our communities and our city and town centres,” Waterson adds.
