When and why does the poundage rate change?
The poundage rate is set annually by the Scottish Ministers and covers the period 1st April to 31st March. "A Partnership for a better Scotland: A partnership agreement" which was published on 15 May 2003 sets out, amongst others, the Scottish Executive's policy on business rates, namely:- "Freeze business rates for 2003-04 and limit increases to no more than inflation for the following 2 years".
How often do revaluations take place and why do we have them?
A revaluation of non-domestic subjects in Scotland is carried out every five years by the Scottish Assessors. This results in the production of new Valuation Rolls, for each local authority valuation area, which contain revised rateable values for all non-domestic subjects. The principal purpose of a revaluation is to ensure that the distribution of the rates burden between ratepayers remains equitable.
The last non-domestic revaluation in 2000 raised the rateable value of some subjects since the previous revaluation in 1995 whilst others decreased. The overall result was an increase in the total rateable value of non-domestic subjects in Scotland which reflected changes in economic conditions. The next non-domestic rates revaluation will take effect from 1 April 2005.
What about the change in the poundage rate following a revaluation?
Following a revaluation, the poundage rate may be raised or lowered depending on the overall rise or fall in rateable values between revaluation periods. Because the total rateable value of subjects in Scotland rose at the last revaluation in 2000 and the bill is based on rateable value multiplied by the poundage figure, the poundage rate for 2000-01 was lowered to achieve the Scottish Executive's aim of maintaining the total rates income in real term at the time of the revaluation (31 March 2000/1 April 2000).
What are transitional arrangements and why do we have them?
The key aim of periodic revaluations is that the business rates paid should be based on an as up-to-date as possible assessment of the rateable value of the property. The total amount of business rates paid by ratepayers will not change in real terms following a revaluation but ratepayers who occupy properties whose rateable values increase by more than the Scottish average will be faced with real increases in their bills and some may be significant. The aim of transitional arrangements is to protect such ratepayers from sudden sharp increases in their bills in the period immediately following a revaluation, allowing ratepayers time to plan to accommodate the true bill over a longer period.
The Scottish Executive implemented a transitional relief scheme at the time of the 2000 revaluation.It is too early to say yet whether the Scottish Executive will implement a transitional relief scheme for the 2005 revaluation.
