Explanatory note

These Regulations make amendments to the Non-Domestic Rates (Retail, Hospitality and Leisure Relief) (Scotland) Regulations 2026 (“the Retail, Hospitality and Leisure Relief Regulations”), the Non-Domestic Rates (Levying and Miscellaneous Amendment) (Scotland) Regulations 2026 (“the Levying and Miscellaneous Amendment Regulations”) and the Non-Domestic Rates (Transitional Relief) (Scotland) Regulations 2026 (“the Transitional Relief Regulations”). The effect is two-fold. First, the non-domestic rates payable in respect of certain lands and heritages used for the purposes of providing particular types of hospitality, or as a live music venue, are reduced by 40% of the daily gross rates payable in respect of a day in the financial year 2026-2027, rather than the 15% relief to which they were generally entitled under the Retail, Hospitality and Leisure Relief Regulations as laid. Only properties with a rateable value of £100,000 or less are eligible for this relief. The reductions operate subject to the condition that, in respect of any given day, the total reduction in the rates liability of any ratepayer under the Retail, Hospitality and Leisure Relief Regulations may not exceed £110,000. Secondly, these Regulations put in place a specific transitional limit for lands and heritages which on a given day in the financial year 2026-2027 are used wholly or mainly as self-catering holiday accommodation.

Regulation 2 makes amendments to the Retail, Hospitality and Leisure Relief Regulations.

Regulation 2(2) inserts a new regulation 4A, whilst regulation 2(4) substitutes a new schedule 1, as well as inserting an additional schedule, schedule 1A. The effect is that, in respect of any day in the financial year 2026-2027, ratepayers with lands and heritages falling within the classes in schedule 1 receive a reduction in the amount of rates payable equivalent to 15% of the daily gross rates payable in respect of the lands and heritages for the day. Ratepayers with lands and heritages falling within the classes set out in schedule 1A receive a reduction equivalent to 40% of the daily gross rates payable in respect of the lands and heritages for the day, provided that certain other conditions are met. In addition to the condition referred to above, that rateable value may not exceed £100,000, there must be no relief granted in respect of the lands and heritages under regulation 5, and an application for the relief must be made. Regulation 4A(4) to (7) sets out how the figure to be taken to represent the gross rates payable in respect of a day is to be arrived at, this depending on whether or not relief under either or both of the Retail, Hospitality and Leisure Relief Regulations or the Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2026 applies. Regulation 4A(8) provides that relief granted under regulation 4A does not apply to the extent that it would reduce the amount of rates payable to less than nil.

Regulation 2(3) amends regulation 5(1)(b) of the Retail, Hospitality and Leisure Relief Regulations so that persons liable to pay rates in respect of any of the categories of lands and heritages listed in schedule 1 or 1A are eligible for 100% relief where the lands and heritages are situated on an island or in a remote area falling within the boundaries described in schedule 2 of the Retail, Hospitality and Leisure Relief Regulations.

Regulation 2(4) amends regulation 6 to provide that relief given under regulation 4, 4A or 5 of the Retail, Hospitality and Leisure Relief Regulations or, where applicable, any combination of those regulations, may not give rise to a total reduction in the rates liability of any particular ratepayer in respect of a day by any more than £110,000.

Regulation 3 makes an amendment to the Levying and Miscellaneous Amendment Regulations, in so far as they amend the Non-Domestic Rates (Restriction of Relief) (Scotland) Regulations 2023. The result is that an award of relief under regulation 4A of the Retail, Hospitality and Leisure Relief Regulations must be compatible with the Subsidy Control Act 2022, as well as an award under regulation 4 or 5 of those Regulations.

Regulation 4 makes amendments to the Transitional Relief Regulations. Regulation 4(2) substitutes a new description of “X” in regulation 9(2) of the Transitional Relief Regulations, which is used to calculate the transitional limit in place to mitigate the effect of rateable value increase as a result of revaluation. The effect is to create a specific transitional limit applicable to lands and heritages used wholly or mainly as self-catering holiday accommodation, where an application for the relief is made and a short-term let licence has been obtained. Regulation 4(3) amends regulation 15 of the Transitional Relief Regulations in consequence of the requirement that an application must be made where specific revaluation transitional relief is sought in respect of self-catering holiday accommodation. It is no longer only relief under the cap in regulation 14 that requires an application. Regulation 4(4) amends regulation 14 of the Transitional Relief Regulations so that the cap on increases in rates for lands and heritages in respect of which a ratepayer had specified reliefs on 31 March 2026 applies to those for which a ratepayer had relief under regulation 4 of the Non-Domestic Rates (Levying and Miscellaneous Amendment) (Scotland) Regulations 2025 (known as the small business bonus scheme relief) because they are split across multiple entries in the valuation roll, as well as those that are the subject only of a single entry, so attracted small business bonus scheme relief under regulation 3. Regulation 4(5) amends regulation 16(3) to substitute a new description of “X” in regulation 10C as it is to be inserted into the Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2022. The change takes account of the transitional limit applicable only to lands and heritages used wholly or mainly as self-catering holiday accommodation where an application for the relief is made and a short-term let licence has been obtained.