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Scotland Questions UK Business Rates Relief

  //business-finance.news-articles.net/content/202 .. scotland-questions-uk-business-rates-relief.html
  Published in Business and Finance on Tuesday, January 13th 2026 at 16:14 GMT by The Irish News

Edinburgh, Tuesday, January 13th, 2026 - A recently announced UK-wide business rates relief package is drawing criticism and skepticism from Scottish businesses and government officials alike. While acknowledged as a welcome, albeit temporary, measure, many are warning that it fails to address the fundamental, long-term issues plaguing the retail and hospitality sectors, and potentially hindering a full economic recovery for Scotland.

The relief package, designed to alleviate pressure on businesses grappling with persistent inflationary pressures and the ongoing cost-of-living crisis, includes a business rates freeze for smaller enterprises. This initiative represents a wider effort by the UK government to bolster the national economy and provide a lifeline to struggling businesses across various industries. However, its effectiveness in Scotland is being heavily questioned.

The Scottish Retail Consortium (SRC) has voiced significant concerns, characterizing the relief as "a sticking plaster on a gaping wound." SRC Director David Lonsdale articulated a prevailing sentiment - that temporary fixes are insufficient and a radical overhaul of the business rates system is required, not just stop-gap solutions. He argues that the current structure inherently disadvantages brick-and-mortar retailers, particularly in comparison to online competitors who often benefit from reduced overheads.

This sentiment has been directly echoed by Scottish ministers, who have publicly acknowledged the difficulties businesses are confronting while simultaneously emphasizing the need for a more sustainable and long-term approach. A Scottish Government spokesperson stated, "We recognize the pressures businesses are facing, and we are committed to supporting them. However, we believe that a more long-term approach is needed to ensure the sustainability of our economy." This suggests a divergence of opinion or at least a desire for greater influence in shaping future policy.

The core issue lies in the inherent flaws within the business rates system itself. Currently, rates are calculated based on property values, a metric that often fails to accurately reflect a business's ability to pay, particularly in a rapidly evolving economic landscape. The rise of online retail, shifts in consumer behavior accelerated by the pandemic, and the lingering effects of inflation have all contributed to a situation where traditional high street businesses are disproportionately burdened.

The Scottish Government's call for a more 'effective solution' suggests an intent to collaborate with the UK government and the business community to explore alternative models. Potential solutions being discussed, although not definitively outlined, likely include exploring options such as:

• Revenue-Based Assessment: Shifting away from property value assessment to a system linked to actual business revenue, providing a more accurate reflection of affordability.
• Sector-Specific Relief: Tailoring relief measures to industries facing the most acute challenges, recognizing that the impact of rising costs varies significantly across sectors.
• Modernization of Valuation Practices: Updating the methods used to determine property values to ensure they are more responsive to current market conditions and online business models.
• Transition to a Land Value Tax (LVT): While a more radical proposal, LVT is gaining traction in some circles as a potentially fairer and more efficient way to tax property, focusing on the unimproved value of land rather than the buildings on it.

While the current relief package offers temporary respite, the underlying debate highlights a critical need for a fundamental review of the business rates system in Scotland. The pressure from the SRC and the Scottish Government indicates a growing consensus that simply applying bandages won't suffice - a systemic overhaul is necessary to ensure the long-term health and vitality of Scotland's economy, particularly its vital retail and hospitality sectors. The ongoing dialogue between the Scottish Government and the UK government will be crucial in determining the shape of future policy and the extent to which Scotland can forge its own path in navigating these complex economic challenges. Further discussion is expected in the coming parliamentary session.