Modernising the Water Industry's Use of Rateable Value to Charge Non-Households for Water and Sewerage Services

Part 2 - The Government's Proposals

The Scottish Government recognises that while the change to use the most recently assigned Rateable Values will benefit the majority of customers, it will have an adverse impact on others. The Government believes that the change should be made soon. However, it also recognises that because of the Rates Revaluation in 2017, the time necessary to inform customers and to make the necessary changes to billing systems, the earliest practicable start date is 1 April 2018. From that point onwards, the current Rateable Values as set by the Scottish Assessors (and used to calculate business rates) will be used by the water industry.

In the past, the water industry has modernised its approach to charging and removed numerous cross-subsidies by phasing these changes over three or four years. This phasing has sought to strike a balance between those facing increased charges and those benefiting from lower ones, the latter category being those who would wish to have the new system introduced as quickly as possible. It also provides sufficient time for those businesses facing increased charges to plan for the impact.

Once introduced, the water industry will update rateable values as they change either as the result of changes at the premises or subsequent rates revaluations. The need for transitional arrangements to phase in changes due to future rates revaluations will be considered at each Revaluation.

Transitional arrangements

The Scottish Government believes that transitional arrangements should be complete by April 2020 to coincide with the final year of the water industry's current charging period. This would result in a transition phased over three years between April 2018 and April 2020. The steps are illustrated below using the same fictitious businesses on page 7.

Table 4