Shops being ‘thwacked by colossal’ employment costs

Business rates rises totalling £7.6m are being faced by shops in Scotland when the new tax year starts, according to new figures.

A total of 4,520 shops liable for the intermediate and higher property rates will experience an increase in their rates bills, according to information obtained by Conservative MSP Craig Hoy and published by the Scottish Retail Consortium (SRC).

The SRC added these same stores saw their rates bills rise £31m in the current financial year.

It comes after the Scottish Government announced the business rate for all firms occupying medium-sized and larger commercial premises will increase by 1.7 per cent in 2025-26.

This will affect more than 22,000 businesses and marks the rate at a 26-year high, the SRC said.

Around 2,380 stores are liable for the higher property rate and will pay a higher business rate than their English counterparts, for the 10th year in a row, it said.

Hotels will see their annual rates rise by £1.9m, and industrial properties by £7.9m, offices by £5.4m, and pubs and restaurants by £600,000.

The increase in business rates bills comes as the UK Government ramps up employers’ national insurance contributions from April 2025.

David Lonsdale, director of the SRC, said: “Scottish retail sales are flatlining, shopper footfall growth remains muted, and the economic outlook is uncertain.

“Yet despite this, medium-sized and larger shops in Scotland are set to stump up a chunky £7.6m extra annually in taxation from next April as the business rate rises to a 26-year high.

“It comes as the retail industry is set to be thwacked by colossal additional employment costs as a result of the recent UK Budget.

“Public policy is loading new statutory costs on to the very stores which help underpin the health and viability of Scotland’s high streets and retail destinations. Increasing the cost of operating stores only serves to make things even trickier for retailers striving to trade profitably.”

The Scottish and UK governments have been contacted for comment.