DEREK Mackay has confirmed the Scottish Government will alter the poundage figure used to calculate business rates next year in a move which could save the retail sector millions.
In his draft budget for the next financial year, Mackay said he will cap the looming increase to the poundage rate, which is used to calculate business rates bills, at CPI rather than RPI inflation.
Historically CPI has been the lower figure of the two and this move should save Scotland’s retail sector £5m, according to the Scottish Retail Consortium.
Mackay also committed to maintain the Small Business Bonus Scheme, which he said “helps many tens of thousands of small and medium-sized businesses”.
On income tax, Mackay pulled a fiscal rabbit out of the hat with the introduction of two new tax bands for incomes of £24,000 to £44,273 and those below £13,850, to be set at 21p and 19p respectively. Mackay also plans to increase higher and top rate tax by one percentage point.
Other measures in Mackay’s draft budget include a commitment to achieving 100% fibre broadband coverage for businesses and homes across Scotland through a £600m investment over the next four financial years to March 2022.
Responding to the draft budget, Scottish Retail Consortium director David Lonsdale said: “Retailers will welcome the finance secretary’s decision to limit future rises in the business rates poundage to CPI, rather than RPI.
“This is positive news that will shave £5m off the rates bills of hard-pressed retailers next year, and more than that in future years. It shows that the finance secretary is listening to the retail industry and the growing chorus from across business and commercial life in Scotland who have spoken up in favour of action to mitigate rising rates bills.”
Louise Daly, associate director for rating at commercial property specialist Colliers International, welcomed Mackay’s move on business rates.
“Mr Mackay has gone above and beyond the Barclay Review by adopting its additional suggestion – which fell outside of the cost neutral remit of the report – to move annual poundage increases from RPI to the CPI inflation measure. This was essential in order to match England and ensure businesses aren’t disadvantaged by choosing to locate north of the border.”
Addressing the Scottish Parliament, Mackay said: “Scottish business will benefit hugely from our reforms to business rates, including a new growth accelerator and our decision to cap the rise in business rates at CPI, together saving firms £96m in the next year and helping make Scotland the most attractive part of the UK to do business in.”