Question
To ask the Scottish Government, further to the answer to question S6W-32009 by Ivan McKee on 17 December 2024, and in relation to the "inflationary increase" in his response, how it has historically a
S6W-32451 · Written Question · lodged by Hoy, Craig
Lodged on
17 Dec 2024Heard / answered on
24 Dec 2024To ask the Scottish Government, further to the answer to question S6W-32009 by Ivan McKee on 17 December 2024, and in relation to the "inflationary increase" in his response, how it has historically adjusted business rate poundage in relation to inflation since 1999.
The answer
Table 1 shows annual inflation as at September between 1999 and 2024 using the Consumer Price Index (CPI), as well as the annual change in the Basic, Intermediate and Higher Property Rates between 1999-2000 and 2025-2026. The rateable value threshold up to which different rates are charged has changed over time. In Scotland, there is no legislation linking the maximum possible uprating of the rates to inflation of the preceding year. Given that Scottish Ministers have chosen to set the Basic Property Rate in order to match or be below the Small Business Multiplier in England since 2007-2008, up until 2016-2017, September Retail Price Index (RPI) acted as a cap on inflationary increases in poundage in Scotland because in England, legislation used to link the maximum possible uprating of the Small Business Multiplier to September RPI of the preceding year. The independent Barclay Review of Non-Domestic Rates published in 2017 noted calls for increases in the poundage to be linked to the CPI rather than the RPI. Since 2017-18, annual changes in the rates in Scotland have been lower than the CPI increase. Revaluations are also typically designed to be revenue-neutral in real terms so both inflation and the growth in the tax base (taking into account expected appeals losses in that cycle) is taken into account when setting the rates.Table 1: Annual CPI change as at Sept (1999-2024) and annual change to the Basic, Intermediate and Higher Property Rates (1999-2000 to 2025-26) Annual CPI change - Sept (%)Basic Property Rate annual percentage changeIntermediate Property Rate annual percentage changeHigher Property Rate annual percentage change19991.2%3.2% 3.2%20001.0%-6.7% -6.3%20011.3%0.4% 2.6%20021.0%1.8% 1.7%20031.4%4.4% 1.3%20041.1%2.1% 1.4%20052.5%-5.5% -5.1%20062.4%-2.6% -2.8%20071.8%-1.8% -2.0%20085.2%3.9% 4.1%20091.1%5.0% 5.0%20103.1%-15.4% -14.6%20115.2%4.7% 4.8%20122.2%5.6% 5.5%20132.7%2.7% 2.8%20141.2%1.9% 2.3%2015-0.1%1.9% 2.3%20161.0%0.8% 3.4%20173.0%-3.7% -3.5%20182.4%3.0% 2.8%20191.7%2.1% 2.0%20200.5%1.6% 1.6%20213.1%-1.6%-1.6%-1.5%202210.1%1.6%1.6%1.6%20236.7%0.0%0.0%0.0%20241.7%0.0%6.7%6.7%2025 (proposed)n/a0.0%1.7%1.6%* Source: Office for National Statistics
Answered by Ivan McKee on 24 Dec 2024.