Chamber and committees

The Scottish Government guarantees each local authority a combination of distributable business rates plus general revenue grant, with the total amount calculated on the basis of assessed need in each local authority area. The actual amount of business rates collected by each local authority is then deducted from this guaranteed funding with the balance paid as general revenue grant. The amount of business rates collected locally therefore has no effect on the total guaranteed funding.

The revaluation of business properties takes place every five years. The income received from business rates in the year prior to a revaluation, in this case 2009-10, is depressed as many appeals against the previous revaluation (2005) are settled towards the end of the revaluation cycle. Conversely the income received from business rates in the first year following a revaluation, in this case 2010-11, is over stated as the majority of appeals, which although backdated to 1 April 2010, will again not be settled until later in the 2010 revaluation cycle.

Therefore, while the latest forecasts in the table show the amount of business rates income collected in 2009-10 and 2010-11, the comparison between the years is distorted by the impact of appeals which deflates the income collected in 2009-10 and inflates the income to be collected in 2010-11. It should also be noted that the 2009-10 figures are near final, whereas the 2010-11 are estimated and as such will change.

The purpose of revaluation over the five year cycle is to redistribute the tax burden, based on changes in relative demand for property, not to generate additional income.

Notes:

2009-10 figures from PNA (provisional notified amount) return from local authorities.

2010-11 figures from PCA (provisional contributable amount) return from local authorities.

Figures relate to gross amount of NDR income minus mandatory and discretionary reliefs.

The figures for 2010-11 use the latest forecast of net income from non-domestic rates in 2010-11 and also draw on council estimates of the amounts they will contribute to the pool from non-domestic rates in 2009-10. Included in the estimated figures are a calculation of gross income, expected losses from appeals and estimated expenditure on mandatory and other reliefs as well as write-offs and provision of bad debt.

The actual income distributed to councils also takes into account prior year adjustments for under and over-payments to the non-domestic rate pool as result of councils collecting more or less non-domestic rates than estimated.

Business Rate Income Distributed 2009-11

Note: The figures above are taken or calculated from relevant annual local government finance circulars issued by the Scottish Government.

The Scottish Government guarantees each local authority a combination of distributable business rates plus general revenue grant, with the total amount calculated on the basis of assessed need in each local authority area. The actual amount of business rates collected by each local authority is then deducted from this guaranteed funding with the balance paid as general revenue grant. The amount of business rates collected locally therefore has no effect on the total guaranteed funding.

Business Rates Collected by Local Authority 2009-10

Note: 1. The figures are provisional notified amounts; the latest available returns for 2009-10 made to the Scottish Government by local authorities.

The Scottish Government guarantees each local authority a combination of distributable business rates plus general revenue grant, with the total amount calculated on the basis of assessed need in each local authority area. The actual amount of business rates collected by each local authority is then deducted from this guaranteed funding with the balance paid as general revenue grant. The amount of business rates collected locally therefore has no effect on the total guaranteed funding.

The revaluation of business properties takes place every five years. The income received from business rates in the year prior to a revaluation, in this case 2009-10, is depressed as many appeals against the previous revaluation (2005) are settled towards the end of the revaluation cycle. Conversely, the income received from business rates in the first year following a revaluation, in this case 2010-11, is over stated as the majority of appeals, which although backdated to 1 April 2010, will again not be settled until later in the 2010 revaluation cycle.

Therefore, while the latest forecasts in the table show the amount of business rates income collected in 2009-10 and 2010-11, the comparison between the years is distorted by the impact of appeals which deflates the income collected in 2009-10 and inflates the income to be collected in 2010-11. It should also be noted that the 2009-10 figures are near final, whereas the 2010-11 are estimated and as such will change.

The purpose of revaluation over the five year cycle is to redistribute the tax burden, not to generate additional income.

Business Rates Collected by Local Authority 2009-11

Notes:

1. The figures for 2009-10 are provisional notified amounts; the latest available returns made to the Scottish Government by local authorities.

2. The figures for 2010-11 are provisional contributable amounts; the latest available returns made to the Scottish Government by local authorities.

Rateable values will vary when compared across any given time period, including a revaluation period, because of a number of reasons. This includes where properties are built or demolished and when existing properties are merged, split, extended or there is a change in use of a property.

However, there are a number of properties which are eligible, but have not claimed. In the coming weeks, the Scottish Government will write to businesses to encourage those who are eligible for the scheme, but have not yet claimed, to apply for the relief under the Small Business Bonus Scheme.

Figures on actual take-up for 2010-11 will be published later in 2011, which will include a breakdown by local authority area.