Vape Shops Excluded from Business Rates Relief
Vape shops in Scotland will be excluded from business rates relief, alongside betting shops and other sectors, as announced by the Scottish government.
Deputy First Minister Jenny Gilruth confirmed that an independent review will be conducted on the methodology used to calculate business rates following significant increases for many companies this year.
The recent hikes have led to concerns from businesses about potential layoffs due to increases of up to six times their previous rates.
Addressing parliament, Gilruth stated that the review aims to resolve apparent anomalies found in some firms' revaluations.
She also emphasized the need for a timely appeals system and a comprehensive review of the assessors' role.
Opposition voices have called for more extensive reforms and questioned why changes to business rates have not been implemented sooner.
Call for Business Rates Reform Amid Cost of Living Challenges
Business rates, officially known as non-domestic rates in Scotland, are set by the Scottish government but collected by local councils to support community services.
The tax applies to business properties such as shops, offices, factories, and warehouses, with the rate determined by the rental value of the property.
On 1 April, new rateable values were introduced for all 260,000 rated non-domestic properties across Scotland, resulting in increased taxes for many businesses.
In the 2026-27 Budget, the Scottish government implemented business rates cuts to mitigate the impact of these revaluations.
Additional transitional reliefs were introduced, including an extension of the Small Business Bonus Scheme, which allows some businesses to receive up to 100% tax relief.
Certain sectors such as payday lending firms, car parks, betting shops, and others are already excluded from these reliefs. The government announced that vape shops will also be excluded from reliefs starting 1 April 2027.
The Scottish government will appoint an independent panel to review the outcomes of the 2026 non-domestic property revaluation, following reports of inconsistent valuations.
This panel will investigate any anomalies in the revaluations and is expected to report within three months of its appointment.
Gilruth commented:
"Ministers have heard the concerns raised by businesses and trade bodies about apparent anomalies within the 2026 revaluation, and that is why we are taking urgent action.
"This includes taking action to ensure vape shops are contributing to the high street, recognising the growth of the sector in recent years and ensuring rates relief aligns with our public health commitments."
Guy Hinks, Scotland chairman of the Federation of Small Businesses, welcomed the government's steps to address some of the "deeply unfair and perplexing anomalies thrown up by the recent rates revaluation."
He added:
"Simplifying the opaque and overly complex assessors system which administers the rates regime reflects what we have been saying for many years."
Responses and Calls for More Radical Reform
Labour's Daniel Johnson expressed disappointment in parliament that more "radical" reforms were not being pursued.
Max Bannerman of Reform UK Scotland criticized this year’s business rates cuts, stating they failed to prevent "unaffordable" increases for many firms. He called for "meaningful" changes rather than "tinkering around the edges."
Scottish Green co-leader Ross Greer highlighted that the government spends over £200 million annually on "untargeted" reliefs and asserted that the current system is "not working."
He told parliament that non-domestic rates are not based on a company's ability to pay and advocated for the inclusion of profit or turnover alongside property value in assessments.
Scottish Conservative MSP Craig Hoy emphasized that businesses facing closure do not want further reviews but urgent action to reduce their bills and better understanding of the system.
LibDem Liam McArthur described the recent tax increases as "eye-watering" and an "existential threat" to many companies.
He urged a revision of the tax calculation method for self-catering properties to allow for a more proportionate approach.
