Decapitalisation rates for the 2023 revaluation: consultation analysis

Executive Summary

On 20 December 2021, the Scottish Government launched the consultation 'Non-domestic rates: decapitalisation rates for the 2023 revaluation' which sought views on the prescription of the decapitalisation rate(s) to be used when non-domestic subjects are valued using the contractor's basis for the next revaluation.

The consultation closed on 13 March 2022 and received 13 responses. Of those, 12 were from organisations and one was from an individual. A list of respondents and links to their responses is available in Annex A where permission has been given to publish this information. We would like to express our sincere thanks to those that submitted a response to the consultation.

The responses to the consultation have informed policy development in relation to the decapitalisation rate(s) for the 2023 revaluation.

Summary of responses

The consultation asked for views on four questions:

1. Should the Scottish Government continue to prescribe decapitalisation rates to be used for the contractor's basis method of valuation at the 2023 revaluation?

2. Should the Scottish Government continue to prescribe two decapitalisation rates?

3. If prescribing two decapitalisation rates, should the Scottish Government continue to maintain the current groupings of properties in each rate?

4. Do you have any further views on the decapitalisation rates for the 2023 revaluation?

In summary, respondents reported they would welcome the continued prescription of decapitalisation rates by the Scottish Government for the 2023 revaluation, and all respondents either supported or had no objection to there being two decapitalisation rates (standard and lower).

Five of the thirteen respondents felt that there should be no change to the current groupings for the two rates, or had no strong views on the matter. Some respondents suggested there should be standardisation across the UK, while one respondent suggested that Scottish Water be included in the grouping for the lower decapitalisation rate. The Scottish Assessors Association (SAA) cautioned that any change to groupings should be carefully considered so that commercial organisations do not inadvertently benefit from the lower rate. Jones Lang LaSalle Limited suggested that the groupings for each rate should be defined more generally than they currently are.

Two respondents expressed concern over using property yield information to determine the decapitalisation rates (method 3 in the consultation document) while respondents including the Scottish Assessors Association, Institute for Revenues, Rating and Valuation and Jones Lang LaSalle Limited acknowledged that this method had been favoured by Scottish case law prior to prescription of decapitalisation rates.

Six out of thirteen respondents noted the relevant decapitalisation rates used in other UK administrations and suggested that these rates be used as benchmarks when considering the appropriate rates for Scotland.

Seven respondents, or just over half, asked that the Scottish Government provide a clear and transparent reasoning and analysis when setting the decapitalisation rates.

About the analysis

As with all consultations it is important to bear in mind that the views of those who have responded are not representative of the views of the wider population. Individuals and organisations who have a keen interest in a topic – and the capacity to respond – are more likely to participate in a consultation than those who do not. This self-selection means that the views of consultation participants cannot be generalised to the wider population.

It is worth noting that a number of responses had very similar or identical wording in some parts, and also that a number of the organisations who responded are also members of other organisations that provided a response.

For this reason, the approach to consultation analysis is primarily qualitative in nature. Its main purpose is not to identify how many people held particular views, but rather to understand the full range of views expressed.

Next Steps

Responses to the consultation have informed policy development in relation to prescription of the decapitalisation rate(s) for the 2023 revaluation. Additional analysis of the information received in response to this consultation can be found below.