Businesses in Scotland: 2024

The ‘Businesses in Scotland’ publication provides information about the number of businesses operating in Scotland. ‘Businesses in Scotland’ breaks down the Scottish business stock by various groupings. These include industry, business size and local authority area. There are also statistics by urban/rural area and country of ownership. The publication includes all businesses that operate in Scotland. This is regardless of where the business has its base. This allows a more comprehensive understanding of the Scottish business environment. This differs from UK-wide publications. These only include a business in Scotland estimates if its UK base is in Scotland.

The estimates have been constructed using data from the following sources:

• the Inter-Departmental Business Register (IDBR)
• the Annual Population Survey (APS) (annual version of the Labour Force Survey (LFS))
• the Family Resources Survey (FRS) and
• Self-Assessment (SA) data.

The IDBR provides the number of businesses registered for VAT and/or PAYE in Scotland. Yet there is a large number of very small businesses which have no employees. These are not included on the IDBR. A modeling procedure combines data from the IDBR with estimates derived from the APS/LFS, FRS and SA data. This estimates the number of unregistered businesses. Economic consultants developed the principles of the model. To do this, they worked with the then Department of Trade and Industry and Eurostat.

Data on unregistered businesses are estimated and therefore subject to uncertainty, as are total business estimates that combine data from registered and unregistered businesses. The Annual Population Survey (APS) (annual version of the Labour Force Survey (LFS)) is one of the key sources for estimating unregistered businesses. The Office for National Statistics (ONS) have recently conducted analysis to assess the impact of falling sample sizes over recent years on the quality of APS estimates. ONS state that although the APS estimates are robust at National and headline regional level, there are concerns with the quality of estimates for smaller groups of the population.

The APS as a sample survey is subject to sampling error. Prior to 2020, a yearly estimate of 300,000 taken from the APS had a 95% confidence interval of around +/- 12,000. However, with falling sample sizes since 2020, sampling error has increased and now an estimate of 300,000 taken from the APS has a 95% confidence interval of around +/- 22,000.

It is still appropriate to use the unregistered estimates included in this release. However, users are advised to note the increased uncertainty around these estimates in recent years. This is important to consider for year on year comparisons of the number of unregistered and of total businesses (Tables A-E), particularly from 2020.

Business units held on the IDBR can be grouped into 3 types:

Administrative Units:

VAT trader and PAYE employer information. Incorporated business data from Companies House supplements this.

Statistical Units:

An Enterprise (Business) Group is the name given to a group of legal units under common ownership.

One definition of a business is:

• the smallest combination of legal units that is an organisational unit producing goods or services. (This is generally based on VAT and/or PAYE records.)
• and this organisational unit benefits from a certain degree of autonomy in decision-making. Especially when the autonomy is for the allocation of its current resources.

A business carries out one or more activities at one or more locations. A business may be a sole legal unit.

A local unit (or business site) is a business or part thereof situated in a geographically identified place. E.g. a workshop, factory, warehouse, office, mine or depot.

Observation Units:

Reporting Units hold the mailing address to which the survey questionnaires are sent. The questionnaire can cover the business as a whole. It could also cover parts of the business identified by lists of local units.

Business counts are the basis for the ‘Businesses in Scotland’ publication. The exceptions to this are Table 8 and Table 13, the basis of which are business sites (or local units).

The purpose of the publication is to provide information about the number of businesses. The estimates also include information about businesses’ employment and turnover. The function of these data is to act as ‘auxiliary variables’ that can be used to:

• classify businesses by employee/turnover size band and
• calculate shares of employment and turnover across different groupings. e.g. industrial sectors, local areas, business sizes etc.

Direct comparisons using the absolute values of these variables on the IDBR are less reliable. This is due to the nature of the underlying processes used to update these variables on the IDBR.

Scotland-level estimates count businesses only once. This differs at local authority area or rural/urban area level estimates. For these, businesses are counted once in each of the areas they operate in (Tables 5-7, 9-11, 16, 18 and 20). Table 8 provides estimates of the number of business sites in each local authority area. Table 13 provides estimates of the number of business sites by urban/rural area. 

The estimates do not include turnover information for financial and insurance businesses. The reason for this is that it is not available on a comparable basis.

Data on unregistered businesses are estimated and therefore subject to uncertainty, as are total business estimates that combine data from registered and unregistered businesses. The Annual Population Survey (APS) (annual version of the Labour Force Survey (LFS)) is one of the key sources for estimating unregistered businesses. The Office for National Statistics (ONS) have recently conducted analysis to assess the impact of falling sample sizes over recent years on the quality of APS estimates. ONS state that although the APS estimates are robust at National and headline regional level, there are concerns with the quality of estimates for smaller groups of the population.

The APS as a sample survey is subject to sampling error. Prior to 2020, a yearly estimate of 300,000 taken from the APS had a 95% confidence interval of around +/- 12,000. However, with falling sample sizes since 2020, sampling error has increased and now an estimate of 300,000 taken from the APS has a 95% confidence interval of around +/- 22,000.

It is still appropriate to use the unregistered estimates included in this release. However, users are advised to note the increased uncertainty around these estimates in recent years. This is important to consider for year on year comparisons of the number of unregistered and of total businesses (Tables A-E), particularly from 2020.

The latest figures relate to a snapshot of the business stock as at March 2024. These were released on 20 November 2024.

We will publish 'Businesses in Scotland 2025' in late 2025. This will follow the release of the UK Business Activity publication. The Office for National Statistics will publish this in autumn 2025.

Any changes as a result of the coronavirus (COVID-19) pandemic are first reflected in the data for 2021.

The 2011 and 2012 publications introduced several methodological changes:

• All data are now published using the Standard Industrial Classification (SIC) 2007 only.
• In 2011 we made methodological changes. This was to the methodology used to estimate the number of unregistered businesses. 
• In 2012 HMRC made improvements to their computer systems. This resulted in the addition of 2,340 extra businesses to the IDBR for Scotland in 2012. The IDBR should have included these extra businesses in previous years also.
• The 2018 publication also introduced a new methodological tweak. This was to constrain the estimates of unregistered jobs to the Scotland total.

The latest 2024 publication tables are consistent for the years 2010 to 2024. i.e. they include all methodological changes above back to 2010.

We have constructed high level time series for 2000 to 2024. One time series is for all businesses (registered and unregistered). A further time series is for registered businesses only. We have produced these long time series on a consistent basis as far as possible – as follows:

We adjusted the registered time series upwards. This was to take account of the 2,340 extra businesses added to the IDBR in 2012. Note that this back revision was based on businesses that were in operation in 2012. We could make additions to the stock estimates for back years by using the birth dates of the businesses. See Table below.

We adjusted the unregistered time series upwards. This was to take account of the improved unregistered businesses estimation methodology. See Table below.

Constructed Back Series

* Adjusted for HMRC additions.
** Adjusted based on relationship between estimates under old and latest methodology in 2010.

Please go to the Tables Archive for data on a SIC 2003 basis for 2000 to 2010. Please note the Tables Archive is not consistent with the latest tables for 2010 to 2024, as we have not updated the Archived Tables with the following:

• The number of unregistered businesses was not estimated using the latest methodology.
• There has been no upward revision of the registered business count. There were extra registered businesses added to the IDBR in 2012. This was as a result of improvements made to HMRC computer systems.

Where will I find the data I need?

The latest 2024 publication tables contain the following:

Time Series 2000 to 2024

All Businesses (registered and unregistered)

Tables A to E include both registered and unregistered businesses. Table A includes the public sector; Tables B to E exclude all public sector businesses.

Registered Businesses Only

Tables 1 - 3 include registered private sector businesses (excluding public sector businesses). Table 4 refers to public sector businesses. Tables 1 - 4 exclude estimates for unregistered businesses.

Local Authority Area Tables (Registered Businesses Only)

Tables 5 - 8 provide data split by Local Authority area. They include registered private sector businesses (excluding public sector businesses). Tables 5 - 8 exclude estimates for unregistered businesses.

Urban Rural Tables (Registered Businesses Only)

Tables 9 - 13 provide data split by the Scottish Government 2016 Urban Rural definition. Tables 9 - 11 and 13 include registered private sector businesses. These exclude public sector businesses. Table 12 refers to public sector businesses. Tables 9 - 13 exclude estimates for unregistered businesses.

Abroad-Owned Businesses Tables (Registered Businesses Only)

National Indicator Tables (Registered Businesses Only)

The IDBR excludes a large number of very small firms. This is because they are small sole traders/partnerships with:

• no employees, and
• an annual turnover of less than the VAT threshold.

This section describes the method used to estimate the number of unregistered businesses in Scotland.

Estimation

The Annual Population Survey (APS), which is the annual version of the Labour Force Survey (LFS), provides data on the self-employed (with no employees). It provides the number of people who are self-employed in their first or second jobs. The estimates from 2010 onwards apply a new methodology. This enables a better estimate of the self-employed. It reclassifies people who have misclassified their employment status.

Data from the Family Resources Survey (FRS) augments the LFS figure for second jobs. The data is on people who are self-employed in a third job. This is to get an estimate of the total number of self-employed jobs (with no employees). This estimate is compared to the level of self-employment that is already registered on the IDBR. This applies to businesses (sole traders/partnerships) with no employees. Many self-employed people are not required to pay VAT or register for PAYE. So the figure from the LFS/FRS is generally higher.

The difference between these two figures represents self-employed jobs in unregistered businesses. This is the starting point for estimating the number of additional sole traders and partners with no employees. The ratio between sole traders and partners is different in each industry. HMRC Self Assessment (SA) data provides this. We used the Survey of Personal Incomes (SPI) before for this purpose. But it was necessary to use a different source. This was due to delays with updated data. It was also due to more stringent disclosure control processes.

We use the ratios to derive the number of unregistered sole traders and partners in each industry. This then allows us to derive the number of sole proprietorships and partnerships.

Estimating Unregistered Businesses

Data on unregistered businesses are estimated and therefore subject to uncertainty, as are total business estimates that combine data from registered and unregistered businesses. The Annual Population Survey (APS) (annual version of the Labour Force Survey (LFS)) is one of the key sources for estimating unregistered businesses. The Office for National Statistics (ONS) have recently conducted analysis to assess the impact of falling sample sizes over recent years on the quality of APS estimates. ONS state that although the APS estimates are robust at National and headline regional level, there are concerns with the quality of estimates for smaller groups of the population.

The APS as a sample survey is subject to sampling error. Prior to 2020, a yearly estimate of 300,000 taken from the APS had a 95% confidence interval of around +/- 12,000. However, with falling sample sizes since 2020, sampling error has increased and now an estimate of 300,000 taken from the APS has a 95% confidence interval of around +/- 22,000.

It is still appropriate to use the unregistered estimates included in this release. However, users are advised to note the increased uncertainty around these estimates in recent years. This is important to consider for year on year comparisons of the number of unregistered and of total businesses (Tables A-E), particularly from 2020.

Time Period Covered

The self-employment estimates from the LFS drive the estimate of unregistered businesses. The data used from the LFS covers the period April to March. i.e. the estimate of unregistered businesses for 2024 was derived from annual LFS (APS) data covering April 2023 to March 2024.

Estimates for the number of people self-employed in a third job relative to those who are self-employed in a second job use FRS data. The data used are a three year rolling average percentage. i.e. FRS data from 2020/21, 2021/22 and 2022/23 is the basis for the 2024 estimates.

Self-Assessment (SA) data as at 2013/14 were used to get the ratio of sole traders to partners for the 2024 estimates. Normally, we would use the most up to date SA data available, however the quality of the sectoral codes in the SA data has been diminishing for some time. The SA data for 2013/14 is deemed to be the latest most reliable dataset for sectoral analysis. Using the 2013/2014 SA data for the 2024 unregistered business estimates has a limited impact on overall estimates of unregistered businesses, as the unregistered estimates are largely driven by the APS/LFS data.

Turnover

Turnover in unregistered businesses will generally be lower than that of registered businesses of the same size. This is because turnover in the former would usually be below the VAT threshold. Turnover for the unregistered businesses is imputed from turnover per head in each industry division. We only use registered sole traders and partners with zero employees for this. The resultant figure is then scaled down by a factor of a half. There is a further issue for a few 2-digit industry divisions. For these, the average annual turnover per unregistered business remains above the VAT threshold. In these cases, we reduce the unregistered turnover to the VAT threshold for that year.

The UK Standard Industrial Classification (SIC) define the industrial sectors presented. This classifies business establishments and other statistical units by the type of economic activity in which they engage.

Assigning Businesses to Industrial Sectors

Businesses may have business sites operating in several industrial sectors. The business as a whole is assigned to one sector. The basis for this is the sector and then division in which the majority of its Scottish employment operates. Some businesses change their sector between years. This is the result of a change in the balance of employment across sites.

Table 8 provides sector classification at business site level rather than business level.

The classification for this publication follows the standard coding scheme. We have shortened some titles to make them more readable. The tables generally exclude central and local government. (This is as defined by the legal status of the business). There are a small number of businesses that provide support services to public administration. For these tables, we include these within the sector ‘Other community social and personal services’. We have excluded extra territorial organisations and private households with employees.

Revision of Standard Industrial Classification

In January 2008, the Standard Industrial Classification underwent a major revision. This was to enable it to reflect the structure of the modern economy more accurately. SIC 2007 replaced SIC 2003. The need to adapt the classification to changes in the world economy motivated the revision. There has been a growing importance of service activities in economies over the last fifteen years. This is mainly due to the developments in information and communications technologies. The revised classification reflects this.

The ‘Businesses in Scotland 2024’ tables provide data on a SIC 2007 basis only. Tables for registered businesses are available for 2010 to 2024. Tables for unregistered businesses (and hence total businesses) are available for 2010 to 2024. Time series data on total (unregistered and registered) and registered businesses are also available from 2000 to 2024. Data on the old SIC 2003 basis are still available from the Scottish Government website. Note that archived tables are not updated with the latest methodology.

For further details on VAT thresholds, see HM Revenue & Customs.

In the tables, we classify businesses by employee size bands. These size bands are on the basis of their total UK employees (except for Table 8). This is because the size of the business as a whole determines its behaviour as an economic agent. A business with a large number of employees in the UK as a whole is likely to behave like a large business. This is regardless of its level of Scottish employment.

Table 8 contains data on the number of business sites. We classify these sites by the total number of employees at each site.

We treat businesses with only one employee (who is also the employer) as a self-employed person working in a firm with zero employees. This is the case unless the business is part of an enterprise (business) group. These businesses provide no employment for others. So it is more consistent to classify them as businesses with no employees.

Public sector businesses engage in more varied activities than the majority of those in the private sector. Table 4 (and Table 12) accounts for this by counting each business once in each sector it has activity in. This helps to provide a more realistic impression of public sector activity in each industry. To provide accurate figures at Scotland level, we count each business only once in the total. As a result, the table components do not equal the overall total.

Estimates of public sector employee jobs are available at local authority area level. For these estimates, see the ONS publication Business Register Employment Survey.

The geographical analyses use a postcode index file. The Office for National Statistics provide this index file. Unregistered businesses are not included in the geographical analyses.

Tables 5-7, 16, 18, 20:

These tables split the data by local authority area. They include each business once in each local authority it operates in. This is irrespective of how many business sites it has in each area. Each business is only counted once in the total for Scotland. Hence cells in the business column of the tables do not sum to the overall total. This is due to double counting.

Note that only businesses are double-counted in these tables. We assign businesses’ employment and turnover, where provided, to the local authority areas they operate in.

Tables 8, 13:

These tables present data on individual business sites within each local authority area (and urban/rural area for Table 13). This is a straightforward count of the number of sites located in each area. Note that in Table 8 the number of employees at each site is the basis for the employee size bands.

Tables 9-11:

These tables split the data by urban/rural area. They include each business once in each area it operates in. This is irrespective of how many business sites it has in each area. Each business is only counted once in the total for Scotland. Hence cells in the business column of the tables do not sum to the overall total. This is due to double counting.

Note that only businesses are double-counted in these tables. We assign businesses’ employment and turnover, where provided, to the urban/rural areas they operate in.

We will publish data on the total number of business sites at intermediate zone. These will be available on http://statistics.gov.scot/.

Within ‘Businesses in Scotland’, we define business ownership as:

• UK (Scotland based)
• UK (Rest of the UK (RUK) based)
• Abroad.

We class business country of ownership as either UK or Abroad (outside the UK). The nationality of the ultimate parent of the business determines the country of ownership. (i.e. the institutional unit, proceeding up a business’ chain of control, which is not controlled by another institutional unit). Where control of a business is shared, we look to the majority ultimate owner. Its country of residence determines the country of ownership. We use data provided by Dun & Bradstreet to identify enterprise (business) groups with abroad ownership. We classify businesses that do not belong to an enterprise group as UK-owned. This is because these are not under the control of another institutional unit.

We next determine where UK owned businesses are registered. To do this, we use the business’s VAT/PAYE registered office address. If this address is in Scotland, we classify the business as Scotland registered. If this address is elsewhere in the UK, we classify the business as RUK registered. This process applies to businesses' associated local units as well.

The Code of Practice for Official Statistics protects the confidentiality of all data held on the IDBR. Specific legislation also provides protection. The disclosure of data relating to individual undertakings without consent is prohibited under:

• the Statistics of Trade Act 1947
• the Value Added Tax Act 1994, and
• the Finance Act 1969.

So measures are in place to ensure that we do not disclose any information about individual businesses or local units. We have rounded all figures in this publication to avoid disclosure. Where necessary, we have taken extra measures to protect confidentiality.

We have rounded the number of businesses/business sites to the nearest 5. We have rounded employment to the nearest 10. We have rounded turnover to the nearest £million.

We have updated the statistical disclosure control process for the 2010 results onwards. Before, we applied a minimum threshold rule. This suppressed the employment and turnover values associated with business counts below a certain threshold. To avoid disclosure by deduction, more cells have also now been suppressed. To further minimise disclosure, we have lowered the minimum threshold. We have also introduced an additional dominance rule to this end. The dominance rule identifies and suppresses cells where a small number of businesses account for the majority of the associated employment or turnover. The overall effect of these changes is that we include more information in the tables. But we provide greater protection for businesses which dominate their respective industry or local area.

General Revisions Policy for Unregistered Businesses

LFS self-employment data is the basis for the estimate of unregistered jobs. This leads to the estimate of unregistered businesses. ONS reweight the LFS data according to the latest population estimates. As a result, we will revise the unregistered time series to take account of the reweighted LFS data. These revisions are generally small in magnitude. We will revise to take account of the latest LFS data on a biennial basis (every two years). We may also make improvements to the unregistered business methodology.

Unregistered Businesses – latest revisions

The unregistered estimates have not been revised back this year. The next set of revisions for the unregistered estimates will be in the ‘Businesses in Scotland 2025’ publication. This will take account of the latest LFS reweighted data. It will also take account of any other methodological improvement.

General Revisions Policy for Registered Businesses

In general, the figures for registered businesses should be final. These should not be revised in future. This is because their basis is a snapshot in time from the IDBR which cannot change. Sometimes, we may discover errors in the industry, geographical or ownership classifications applied to businesses. This would be when quality assuring the data for the latest year. In which case, we may correct the erroneous business classifications in previous years.

Registered Businesses – latest revisions

There have been no revisions to registered business estimates. However, the adult population estimates in tables 17 and 18 have been revised back to 2012, which leads to revisions of the business stock rate back to 2012.

Scotland’s official statistics

You can access a range of official statistics about Scotland on the Open Data Platform. These statistics are for information and re-use. You can explore the data by theme, organisation, or geography. You can also search for datasets, places or enter your postcode to find data about your local area. You can view the data as tables, maps and charts, or download them in various formats.

Industry Statistics Database

The Industry Statistics Database provides a range of economic statistics for industry sectors in Scotland.

Scottish Annual Business Statistics (SABS)

Scottish Annual Business Statistics (SABS) provides data mainly on three areas. These are the Production (including Manufacturing), Construction and Service Sectors in Scotland. The statistics are largely derived from the Annual Business Survey. This covers approximately two thirds of the economy. The main sectors not covered are the financial sector, parts of agriculture and the public sector. So the statistics from SABS are best suited to the analysis of individual industries. This is rather than the economy as a whole.

Business Insights and Conditions Survey (BICS) weighted Scotland estimates

The Office for National Statistics (ONS) publish the Business Insights and Conditions Survey (BICS). The Scottish Government produce Weighted Scotland estimates using the BICS data. The ONS’ BICS is a voluntary fortnightly business survey. It captures businesses’ responses on how they have been affected by current conditions. The BICS asks businesses about their impact on turnover, workforce, prices, trade and business resilience. The weighted Scotland estimates are for businesses with a presence in Scotland that have 10 or more employees.