Local government finance circular 5/2023: non-domestic rates relief guidance

Business growth accelerator relief

46. The key legislation is The Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2022, as amended. Councils may be assisted in the idenitification of properties eligible for this relief by a mark on the valuation roll required under section 2A of the Local Government (Scotland) Act 1975 flagging entries that relate to newly buit or improved property.
47. Properties that contain new buildings are eligible for 100% mandatory new-build relief until twelve months after they are first occupied. Improved properties that contain buildings are eligible to see no rates increases for 12 months until after the RV has been amended as a result of the improvement.
48. The 2022 regulations set out four regulations under which relief can be granted:

• New-build (1): Regulation 4 provides for 100% relief to the entire RV of the property for twelve months until after first occupation. Where a new build has been entered in the valuation roll within the last 12 months, 100% relief will be available until 12 months after the property becomes occupied, or four years after the date on which the entry in the valuation roll took effect, whichever is sooner. Where the new build has been entered into the valuation roll more than 12 months previously, 100% relief is available until 12 months after the property becomes occupied or the latter of the following dates: 31 March 2025 or four years after the date that the entry in the valuation roll took effect. This applies to new entries on the Roll made under section 2(1)(b) of the Local Government (Scotland) 1975 Act containing one or more buildings or parts of a building, none of which were shown in any entry in the roll for the day prior to the day that entry takes effect.
• New-build (2): Regulation 6 provides for 100% relief to the entire RV of the property, for twelve months until after first occupation. Where a new build has been entered in the valuation roll within the last 12 months, 100% relief will be available until 12 months after the property becomes occupied, or four years after the date on which the entry in the valuation roll took effect, whichever is sooner. Where the new build has been entered into the valuation roll more than 12 months previously, 100% relief is available until 12 months after the property becomes occupied or the latter of the following dates: 31 March 2025 or four years after the date that the entry in the valuation roll took effect. This applies to entries that contained no buildings (e.g. ground entries in the Roll). This applies to entries on the Roll made under section 2(1)(d) of the Local Government (Scotland) 1975 Act containing one or more buildings or parts of a building, none of which were shown in any entry in the roll for the day prior to the day that entry takes effect.
• New-build (1 or 2) + improvements: Regulation 8 sets out how properties in receipt of one of the above two types of new-build relief are treated when they are further improved.
• Regulation 10 provides for delayed increase in rates bills for 12 months on existing entries in the Roll which comprise a building where there has been a property improvement. 100% relief is available only on the increase in RV, which is equal to the final RV minus the RV prior to the commencement of the works. Examples would typically include an extension to the rear of a shop; the erection of a new building in an entry that already has buildings; the installation of a sprinkler system, airconditioning, underfloor heating, or solar panels.

49. Property improvements comprise the installation of plant and machinery that falls within class 4 in the schedule of the Valuation for Rating (Plant and Machinery) (Scotland) Regulations 2000.
50. If the property was an existing dwelling or other building that was previously exempt from the valuation roll immediately prior to being entered on the roll, then it is not eligible for BGA Relief. 
51. Where an unoccupied property in receipt of new-build relief is divided, each new entry continues to be eligible for relief until twelve months after it is first occupied. Where an occupied entry in the Roll in receipt of new-build relief is split, relief continues to be available on each unit until the end of this twelve-month occupation period but no more.
52. Where an increase in RV is due to a split, merger or reorganisation, a property is not eligible for relief, even if the process involves for instance the creation of a new building.
53. BGA for property improvements is available even where there is an increase in RV due in whole or in part to a change in the way the lands and heritages are being used.[1] A property that was converted from one type of use to another (e.g. office to hotel) may thus qualify for relief, subject to the other eligibility criteria.
54. The Non-Domestic Rates (Levying and Miscellaneous Amendment) (Scotland) Regulations 2023 provide for continuation of improvement relief awarded in respect of 2022-23, where the period of relief continues into 2023-24. This relief will be awarded at the same percentage of relief as applies at 31 March 2023, but on the basis of the rateable value following the revaluation taking effect on 1 April 2023.
55. The local authority determines whether a property is eligible for relief, and may wish to consult the Assessor’s office to discuss eligibility. The Non-Domestic Rates (Scotland) Act 2020 provides that Assessors will identify new builds and improved properties with a marker in the Valuation Roll in order to facilitate identification from 1 April 2021. From 1 April 2022, the Non-Domestic Rates (Valuation Roll) (Modification) (Scotland) Regulations 2022 provides that the installation of specified plant and machinery or increases in rateable value of lands and heritages where there has in part been a change in the way they have been used will also be identified on the roll by Assessors.
56. Local authorities are encouraged to liaise with the assessor if a property in the above circumstances applies for BGA Relief, in order to confirm eligibility for the relief.
57. This relief is mandatory and 100% funded by the Scottish Government.
58. This relief requires an application form. An application must be made in a given financial year in order for the council to be able to award/start awarding the relief in that year (except 2018-19 for which an application can be made retrospectively). 
59. BGA Relief applies generally for properties of a certain type (buildings) and in certain circumstances (new and improved) and is therefore unlikely to be considered a subsidy.