Scottish Budget 2026-27 - Focus on business rates
21 January 2026

Last week the Scottish Government delivered its tax and spending plans for the next financial year to Parliament.  Although SNP leads a minority government, with Labour having indicated it will abstain, it is expected that the £68bn Budget will be voted through next month. 

Part One of this article provides a brief overview of the Budget and Part Two focusses on changes to Non Domestic Rates (NDR) and its associated relief schemes. With so much concern about the rise in business rates, Part Three of this article provides guidance on how to appeal against draft revaluation notices.

Part One – Overview of Budget Headlines


Economic Outlook – Scotland’s growth trajectory remains on a similar path to that of the rest of the UK, with the Scottish Fiscal Commission (SFC) forecasts only a slight rise in GDP growth, from 1.3% in 2026-27 to 1.4% in 2027-28.  Similarly, like the OBR, the the SFC has down productivity growth, forecasting a reduction of 0.3% by 2029-30 to 0.9% growth per year.  On a slightly more positive note, inflation is forecast to fall back to the Bank of England’s 2% target by 2027-28.

Labour market - Unemployment is forecast to oscillate around 4.1%, with employment forecast to grow by 0.3% in each of the next three years.  Earnings growth is predicted to remain broadly stable at 2.9% in 2026-27 and 2.7% over the following two years. Earnings growth in Scotland in 2026-27 is forecast to be slightly lower than the UK average, partly due to the relatively weak earnings growth in the North East of Scotland.

Personal taxation - With only minor changes to personal taxation, higher rate taxpayers will continue to pay more income tax in Scotland than they would elsewhere in the UK, although 55% of Scottish tax payers (55%) will continue to pay slightly less than in the rest of UK, partly due the increase in the starter and basic bands by 7.4%.

The Scottish Government intends to introduce an Air Departure Tax (ADT) in April 2027, with a private jet surcharge and also to introduce two new bands of Council Tax for properties valued above £1 million or £2 million from 2028.

Total resource funding is forecast to grow by 1.1% compared to last year, with most being targeted at health and social security. Local government revenue will see a real terms increase of £419 million (+2.9%) which falls far short of what councils were calling for.

The capital budget is 0.3% smaller in real terms and with the majority share being allocated to Transport and Housing.

Climate Change -  The Budget allocates £5bn towards reducing carbon emissions and mitigating the impacts of climate change.  Most of this will be directed at increasing low carbon transport choices and improving energy efficiency in housing, with only a small slice (£110.2m) being directed at offshore wind.  (Note, to deliver plans within Scotland’s first carbon budget, covering period 2026 to 2030, an estimated £16bn will be required)  

Future Investment Plans -  The Scottish Government has announced a new four-year Investment Delivery Plan. Whilst investment in Housing is set to increase by 26% over the four year period, Climate Action and Energy are set to face the largest reduction in spending, down by 23%. Funding on Education & Skills, along with Rural Affairs and Land Reform, is  also set to decrease by 2028/29.  Although spending on Education in this coming year is set to increase, including a 10% rise in the budget for colleges.

Part Two – Non Domestic Rates and associated relief schemes


Although NDR (business rates) are local taxes on land and heritages which will raise an estimated £3.5bn for local authorities this coming year, the actual rates and associated reliefs are set by the Government’s Budget. The amount of actual tax a business pays will depend on the rateable value of its property, set by independent assessors, multiplied by the poundage rates set by the Government. 

Given rate revaluation, the Government itself expects over 144,000 Scottish business properties will see an increase in their rateable value in 2026. This is likely to include many marine businesses, although the actual amount due depends on the rates and eligibility to the reliefs summarised below, including the Small Business Bonus Scheme, the Transitional Relief Schemes, and broader support to retail, hospitality and leisure (RHL) businesses.  

Poundage -  From 1st April 2026 the Government will reduce the poundage (multiplier) for business rates across all bands:

  • Small properties (RV ≤ £51,000): reduced from 49.8p to 48.1p
  • Medium properties (RV £51,001–£100,000): from 55.4p to 53.5p
  • Large properties (RV > £100,000): from 56.8p to 54.8p


These modest cuts aim to slightly lower rate bills across the board.

The Small Business Bonus Scheme -  which provides 100% exemptions to properties with combined rateable values of less than £12,000 remains unchanged for the next three years.  Above £12,000 the relief tapers down – see below

  • £12,001 – £15,000 → relief tapers from 100 % down toward 25 %
  • £15,001 – £20,000 → relief tapers from 25 % down to 0 %


For multiple properties -  a business can still get relief if the combined RV for all properties in Scotland is £35,000 or less, although the rates and tapers will vary.

Transitional Relief Scheme -  is designed to help SMEs weather sudden jumps in rates bills following revaluation. Increases in bills will be limited for small, medium and large properties over the next three years as illustrated in the diagram below.


The Budget also includes details of a new Small Business Transitional Relief scheme aimed at ratepayers losing eligibility for Small Business Bonus Scheme relief due to the impact of revaluation, pushing rateable values over £20,000. In this scheme eligible ratepayers will pay 25% of any increase to their net bill in the first year (2026-27), 50% in the second year (2027-28) and 75% in the third year (2028-29).

Retail, Hospital and Leisure (RHL) Relief -  From 1st April 2026 to March 2029 RHL premises liable for either Basic or Intermediate Property Rates will be eligible for a new 15% NDR relief, capped at a £110,000 per business per year.  The islands and remote properties will get 100% RHL relief, although also capped at £110,000.  In total this new relief is expected to assist up to 37,000 businesses.

Crucially this new RHL is expected to extend to leisure marine businesses, such as marinas, whereas previously the relief, although set at 40%, was only for hospitality businesses and limited to properties with a rateable value of under £51,000.  

Currently there is no regulatory Schedule listing every eligible property type for the new 15 % RHL relief, although the Government’s budget papers repeatedly refer to it applying to  “properties in the retail, hospitality and leisure sectors” and this is also reflected in Local Government circulars. Eligibility will rest on the “wholly or mainly used” test that was explicit in the 2025/26 hospitality relief legislation and continues to apply under the 2026‑29 RHL relief framework.

  • Wholly used: The property is entirely used for the eligible purpose (e.g., a marina operating solely for leisure boating, visitor moorings, boat hire).
  • Mainly used: The property’s principal function is leisure/visitor-oriented, even if a small portion of the site is non-eligible commercial activity (e.g., a small maintenance shed).


Whilst some have suggested this RHL relief does not go far enough, nor will it provide the same level of certainty that is afforded by the new permanent RHL lower multipliers for RHL businesses in England, the Institute of Fiscal Studies suggests the Scottish 15% RHL relief will be a little more generous than the equivalent lower rate in England for small RHL businesses, but less generous for larger businesses occupying multiple properties due to the cap.  

British Marine Scotland would welcome members views on the impact rate revaluation, combined with the reliefs announced are likely to have on business plans to inform its engagement and lobbying efforts.  However, if you have specific concerns re a valuation notice you may want to seek specialist advice from rate advisers, or follow the steps below.

Part Three -  Challenging a Draft Valuation Notice in Scotland


Scottish Assessors issue a Draft Valuation Notice to show the proposed Rateable Value (RV) of your property which will determine your NDR bill.  If you wish to challenge, there are number of steps you can take, as summarised below:  

1. Check that the property description, size, and usage are correct, for example for marinas this might include

  • Office / reception buildings
  • Workshops / storage
  • Slipways, pontoons, ancillary facilities
  • Any retail or leisure facilities


Errors in property type, size, or usage can affect the rateable value and the eligibility to reliefs mentioned above.

2. If you think the RV is too high, start by contacting your local Assessor’s office, via the Scottish Assessors Association website and provide evidence such as:

  • Recent property valuations or rental data
  • Building plans or measurements
  • Operational details showing primary use (e.g., leisure marina vs commercial storage)


Matters can sometimes be resolve disputes without a formal appeal.

3.  If necessary, proceed with a formal appeal by submitting a Proposal for Alteration (PfA)

Key points to note:

  • Must be submitted before the ‘date of entry into force’ of the valuation list (usually by 31 January before the financial year).
  • State clearly why you believe the RV is too high, referencing:
    • Comparisons with similar marinas
    • Incorrect property descriptions
    • Incorrect valuation methods
  • Attach supporting evidence (maps, photos, market rental data, etc.).
  • The Assessor has a duty to consider your PfA and may adjust the RV if justified.
     

4.  If you disagree with the Assessor’s final decision, you can appeal to the Valuation Appeal Committee (VAC) for your council area.  It is important to note:

  • Must submit appeal within 3 months of receiving the Assessor’s notice.
  • VAC is an independent tribunal, not part of the Assessor’s office.
  • You can bring legal representation or expert witnesses, including a chartered surveyor familiar with marina valuations.
  • The VAC can confirm, reduce, or increase the RV.


Finally, if you still disagree with the VAC decision, the next step is to appeal to the Court of Session in Edinburgh although this is rare and only appropriate for complex or high-value disputes.