Business rates (Scotland)
This fact sheet covers Scotland. We also have a version for England & Wales if you need it.
This fact sheet tells you how the council sets the level of your business rates bill. It explains what the council can do if you don’t pay and what your rights are.
Use this fact sheet to:
see when you might not have to pay your business rates in full;
understand your rights if the council uses sheriff officers to try to get their money back;
find out what other types of action the council can take; and
negotiate an arrangement to pay back the business rates debt.
Coronavirus and business rates
For information about changes to business rates due to coronavirus, see our coronavirus advice and support.
How business rates are set
Councils are responsible for sending out business rates bills for ‘non-domestic’ properties in their local area. ‘Non-domestic’ means properties such as shops, warehouses and factories because they are not usually classed as family homes.
The amount you pay in business rates depends on your property’s ‘rateable value’ and a ‘national poundage rate’.
The ‘rateable value’ is based on how much rent you would be able to charge for your property if it was placed on the open market. This may be different to the rent you actually pay. For example, this could be because your rent was set at a different time. Scottish Assessors set rateable values and carry out a re-valuation every five years.
The ‘national poundage rate’ is a percentage of your rateable value. It is set each year by the Scottish Ministers and covers the period from 1 April to 31 March of the following year.
The occupier of a non-domestic property is liable for the business rates. If you run a partnership or limited company, then the ‘occupier’ would be the partnership or limited company.
If you use a property as your home and your business premises, you may need to pay both council tax and business rates for the property. If you are unsure whether this applies to you, contact the Scottish Assessors Association. See Useful contacts at the end of this fact sheet.
What if I think the rateable value is wrong?
If you think the rateable value of your property is wrong, you may be able to appeal. For example, you may think that there is an error in how the rateable value has been worked out, or there may have been a change in circumstances which has affected the value of your property. You could seek help from a professional adviser to help you make an appeal. Some members of the Royal Institution of Chartered Surveyors and the Institute of Revenues, Rating & Valuation may offer this service, but they will charge you fees. See Useful contacts at the end of this fact sheet.
Appealing your rateable value is a complicated area. If you are considering making an appeal or employing a professional adviser, contact us for advice.
Even if you think that the rateable value of your property is wrong, you must keep paying your business rates at the level that they have been set until the appeal is decided.
Before appealing, try contacting the Assessor’s office to discuss your valuation informally. See the Scottish Assessors Association website, www.saa.gov.uk.
Can my bill be reduced?
In some situations, you may be entitled to ‘relief’ from business rates. This means that you would not have to pay all, or part, of your business rates bill. Examples of types of relief schemes are listed below.
Small business bonus scheme. Under this scheme, you may not have to pay business rates if you occupy business premises with a rateable value below a certain level set by the Scottish Government. Contact us for advice.
Charitable rate relief. This may apply if your business is a registered charity.
Disabled person's relief. This may apply if your premises are used for providing care or welfare services to those who are ill, or who have a disability.
Relief for empty or newly re-occupied properties. This may apply for a certain time period if your premises are empty and not in use. It may also apply for 12 months if your business is occupying a property that has been empty for a long time.
Further information about relief from business rates go to www.mygov.scot and search for 'Business rates relief'.
Liability when no longer trading
If you are tied into a lease for your business premises but are no longer trading, you may still be liable to pay ongoing rent and business rates. There are different ways of trying to deal with lease agreements where you have stopped trading. This is a complicated area. Business Debtline can provide further advice on this. Contact us for advice.
Can I get relief from business rates if I am in severe hardship?
If you are suffering severe hardship and you cannot pay your business rates, contact your local council. They could decide to give you business rates relief but they do not have to do this.
Your council is only likely to give you relief if:
you are in extreme hardship;
your business is important to the local community; and
your difficulties will not continue after the council help you.
For more information about applying to your council for severe hardship relief, contact us for advice.
Dealing with business rates arrears
You will normally receive a bill from the council in March or April each year. It will tell you the amount you have to pay in the coming year and how the council has worked out that amount. Business rates are normally payable in ten instalments, starting in May and ending in February. However, your council may offer you different payment arrangements.
Business rates arrears are a priority debt. If you miss a payment towards your business rates, contact your council as soon as possible to make an arrangement to pay back the arrears. They should send you a reminder letter. This will give you seven days to make your late payment. If you do not do this, or if you fail to pay after a second reminder, you will lose your right to pay in instalments.
You will then be sent a final notice giving you 14 days to pay the bill for the rest of the business rates year. Keep making payments for your ongoing bill as well as an amount towards the arrears. The council will usually ask you to clear your arrears by the end of the current business rates year. However, if you are not able to do this, you should still make an offer towards the arrears that you can afford.
If you still do not pay, or if the council does not accept your offer of repayment, they will usually apply for a ‘summary warrant’ against you. See the next section Summary warrant for more information.
If the business rates are owed by a limited company, you may be able to apply for a moratorium for the company. This is a formal breathing space that stops a creditor taking or continuing legal action against your company. The purpose of this is to give you time to put a plan into place to deal with the company’s debts.
Business rates arrears are collected through a special procedure called a ‘summary warrant’.
To get a summary warrant, an application is made to the sheriff supported by a certificate that the business rates are due and unpaid. If the council follow the correct procedure, the sheriff must grant the summary warrant. A 10% penalty will be added to your debt.
Your council may not tell you that it is applying to the court for a summary warrant. Even if you are told that a summary warrant application is going to be made, you may not be told when this is going to take place.
Once you have received a document called a ‘charge for payment’, you can apply to the sheriff for time to pay your business rates debt. If the court agrees to your application, they will make a ‘time to pay order’. See When can I apply for a time to pay order? later in this fact sheet for more information about the ‘charge for payment’ and time to pay applications.
If your time to pay order application is granted and you keep making the payments ordered, the council cannot make you bankrupt or use ‘diligence’ against you. Diligence means further action that the council can take to recover the money you owe after they have got a summary warrant against you.
If a summary warrant is in the name of your limited company, the council can only recover the unpaid business rates from the limited company itself. However, if you rent your business premises, check if you have signed a 'personal guarantee'. This means you have agreed to pay the debt back personally, even if your company closes. If you have signed a personal guarantee, contact us for advice.
The council could choose to recover the money you owe by making a claim through the sheriff court to get a ‘decree’ against you. This is a different type of court order which confirms what you owe and how it should be repaid. You would get notice of this type of application. However, the council will usually choose to use the summary warrant procedure. If you think that the council may be trying to get a decree against you, contact us for advice.
When can I apply for a time to pay order?
Once a summary warrant has been granted, the council must serve you with a ‘charge for payment’ before they can take further action against you. When a document has been ‘served’, it means that the document has been delivered in the correct way.
You can apply for a time to pay order when a charge for payment has been served on you and the time limit stated in it (usually 14 days) runs out.
What is a charge for payment?
A charge for payment is a formal request in writing, demanding that you pay the arrears within a certain period of time, usually 14 days. The council cannot enforce payment of the debt using diligence (for example, arresting your wages) until the charge has been served and the time limit stated on it runs out. The charge for payment should be served by a sheriff officer and a witness. In very limited circumstances, it can be served by post.
You may be told about your right to apply for a time to pay order when the charge for payment is served. However, the council or any sheriff officer does not have to do this.
How do I apply for a time order?
When a charge for payment has been served, the papers that you get from the council may include a form called a DSA 2. This is the form to use to apply for a time to pay order. If there is no form with your charge for payment, you can get a copy from your local sheriff court.
When you fill in the form you will need to provide all your financial details. This information will show the sheriff why you can’t pay the full amount, but that you can pay instalments towards the debt.
You can apply for a time to pay order yourself. Contact us for advice before applying as this is a complicated area. Alternatively you can find a local money adviser to help you at www.moneyadvicescotland.org.uk.
The Debt Arrangement Scheme (DAS)
You may benefit from applying for a debt-payment programme under the Debt Arrangement Scheme (DAS). If you are successful in applying for a debt-payment programme, you will make one regular payment to cover most of your debts, including your business rates arrears. This is made to an approved payments distributor who will send the money to your creditors for you. If you keep to the agreed payments, your creditors will not be able to use diligence (enforcement action) against you.
A debt-payment programme will give you protection against your creditors making you bankrupt, or forcing you to pay your debt by using diligence. This protection starts once you have made an application for a debt-payment programme and are waiting for it to be approved.
Joining a debt-payment programme under DAS freezes interest, fees and charges on your debt. This means you are not charged extra from the date you apply for a debt-payment programme. Interest, fees and charges will continue to be frozen as long as you keep to the payments. For more information, see our Debt Arrangement Scheme fact sheet.
What can a summary warrant lead to?
If you have received a ‘charge for payment’ for your business rates and have not applied for time to pay, or if you have been granted time to pay but have fallen behind with the payments, the council will be able to take further action against you. Types of diligence that might be used include:
bank arrestment and action of ‘furthcoming’;
an attachment of property outside your home;
an attachment of money;
an application to the sheriff court for an exceptional attachment order (EAO);
inhibition on the sale of your house; or
an earnings arrestment.
See our Diligence fact sheet fact sheet for more information.
A bank arrestment will freeze your account until you give permission, or a ‘mandate’, for release of an amount to cover either the total debt due, or a lump sum towards it. If you don’t sign the mandate the creditor can raise a ‘furthcoming action’. This would order the bank to release the funds that have been frozen. If the creditor does not raise a ‘furthcoming action’, and you do not agree to release any money arrested, it will automatically be released after 14 weeks.
If you have been left with little money because of the arrestment, (for example, your wages had just been paid into the bank), try to get the sheriff officer to arrest only part of the amount of the debt. Make them an offer to repay the rest by instalments. They may insist on you giving them details of your employment, so they can arrest your wages if you miss a payment.
There is a limit to what can be arrested in your bank account. At present, a minimum of £529.90 must be left free from arrestment. This is known as the ‘protected minimum balance'. The amount changes from time to time.
The 'protected minimum balance' does not apply to business accounts.
Attachment of property outside my home
A sheriff officer may decide to try to arrange the seizure and sale of some items of your personal property. The council’s right to try to seize property outside your home is different to their right to seize property inside your home.
Before making an attachment for unpaid business rates, the sheriff officer must show you the summary warrant and give you a last chance to pay the debt and expenses.
An ‘attachment’ of personal property is where sheriff officers seize property outside of your home. We will use the term ‘attachment’ in this fact sheet. An ‘exceptional attachment order’ (EAO) is where a sheriff officer seizes property inside your home. This should be a last resort and the creditor would have to apply to the sheriff court before they can do this. See the later section Exceptional attachment order for more information.
You should leave the attached items in the place where they were attached. It is a breach of the attachment for you to remove, damage or give away attached items. If you breach an attachment in this way, the sheriff officer would be entitled to demand the value of the item or to attach other items. A breach of the attachment may be treated by the sheriff as contempt of court.
The council should serve a Debt Advice and Information Package on you no more than 12 weeks before taking steps to carry out the attachment. This must be in the form set by the Scottish Government. It explains your rights and gives you details of how to get advice. This can be delivered by the sheriff officer when they visit you to carry out an attachment.
Rights of entry
The sheriff officer cannot enter your home to enforce an attachment. However, they can go into a garage or outhouse and can enter any of your business premises.
What cannot be attached?
Sheriff officers cannot attach:
any tools of the trade, books or other equipment that you reasonably require to carry out your profession, trade or business, up to a total value of £1,000;
any vehicle you reasonably require up to the value of £3,000;
a mobile home, if it is your only or main residence; or
any tools or other equipment reasonably required for the purpose of keeping your garden or yard in good order.
What can I do to challenge an attachment?
Once the attachment is complete, the sheriff officer must give you a document giving details of the goods attached and the value placed on them. You have a right to buy back (redeem) the items at that value. You have 14 days from the date of the attachment to redeem the items.
If the sheriff officer attaches something which is normally exempt, you must get advice immediately. You may have to apply to court to challenge the attachment. This is done using form 13. Contact us for advice for more information on how to do this.
If you think something has been undervalued, you can apply to the court at any time before the auction using form 4.
Where your car has been attached (because it is valued at more than £3,000), you can apply to have a sale within 14 days and for you to be given back £3,000 to buy a second-hand replacement. You need to use form 11 for this.
If the item belongs to a third party, they can apply to the court for its return using form 18.
Items which are jointly-owned (for example, a car) can be attached. This includes items owned by you and a partner who you live with, and items owned by you and your business partner. However, you can sometimes avoid the sale of an item that is jointly-owned by you and a partner that you live with by arranging for them to buy your share of the item using form 19. Alternatively, the other person can apply to the court using form 20 to ask the sheriff to release the jointly-owned goods on the grounds that their sale would be ‘unduly harsh’ to that person.
You must be told the date and where the sale of your items will take place. The sale will not take place in your home. Goods will usually be taken to an auction room. If the sheriff officer thinks it is appropriate, the auction could take place at your business premises.
You may still be able to buy the goods back at the value set by the sheriff officer before the sale. You will still be liable for any debt that is left over once the goods are sold.
Once an item has been attached, the sheriff officer can remove and sell it seven days after reporting the attachment to the sheriff court.
There are set forms that you should use when making an application to the sheriff court about problems with attachment. To find these forms online go to www.legislation.gov.uk and take the following steps.
Type Act of Sederunt (Debt Arrangement and Attachment (Scotland) Act 2002) 2002 in the Title area of the search box.
Click on the link Act of Sederunt (Debt Arrangement and Attachment (Scotland) Act 2002) 2002.
Find the PDF document on the left-hand side of the page and open it.
Find the form you want towards the bottom of the document, in the part called Appendix 1.
You can also get copies of these forms from your local CAB or law centre. If you need help with court forms, contact us for advice.
This is a type of diligence where the creditor instructs a sheriff officer to seize money or cheques that you hold. A money attachment can only be used after:
the council has got a summary warrant against you;
you have been served with a charge for payment;
the period for payment that is stated in the charge for payment has run out and you have not paid the debt; and
where you are an individual, the council has provided the Scottish Government’s Debt Advice and Information Package.
A money attachment cannot be made in relation to money that is kept within your home, or in a situation where an arrestment of your bank account would be possible. It is a type of diligence that could be used by the council if you operate a business which deals mainly in cash.
Within 14 days of the money attachment being carried out, the sheriff officer must present a signed report of money attachment to the sheriff in a set format. A copy of the report of the money attachment must also be given to:
the council; and
any other person who has disputed the ownership of the money.
If the report is not made in the required timescale, or on the correct form, the sheriff can refuse to accept it. If this happens, the attachment will no longer have effect and the money that has been attached must be returned to you by the sheriff officer.
In order to release the money that has been attached, the council must apply for a ‘payment order’ within 14 days of the date of attachment. If the council does not do this in time, the money attachment will automatically end.
How can I challenge a payment order?
If you want to challenge the payment order, think about whether you have good grounds to do this. Good grounds could include the following.
You do not own the money that has been attached.
The money attachment is ‘unduly harsh’.
The money attachment has not been carried out properly.
You must apply to the sheriff court within 14 days of the council’s application for the payment order being made. There will be a hearing with a sheriff. If you want to challenge the application on the grounds that you do not own the money that has been attached, you will need evidence to prove this. The sheriff could order that a money attachment should no longer have effect and that the money should be returned to you.
Exceptional attachment order (EAO)
This is a type of diligence which creditors can try to use where they think that you have property in your home which is valuable enough for them to want to try to have it attached and sold at auction.
The council should only apply for an EAO as a last resort. Unlike an attachment for items of property outside your home, the council has to apply to the sheriff court for an EAO.
Before granting an EAO for business rates arrears, a sheriff will have to consider a number of factors, including:
whether you have already received money advice;
any agreement between you and the local authority to settle the debt; and
any statement you have made to the court about your assets, their value and your overall financial circumstances.
Once the sheriff has considered all this, they have to look at the following questions.
Is a visit by a money adviser required to establish your financial position?
Has the council taken responsible steps to negotiate a settlement of the debt?
Has the council tried to recover the debt in other ways?
Is there a reasonable chance that the amount obtained at an auction of your non-essential assets would be equal to the expenses of the attachment plus £100?
Is it reasonable in all the circumstances to grant the EAO?
What cannot be attached in an EAO?
The items that should not be attached in an attachment should also not be attached in an EAO. However, there are some additional items that should not be attached in an EAO if these are reasonably required by a member of your household. These include:
basic household furniture;
a refrigerator; and
This is not a complete list of the items which are exempt. If you are unsure whether something should be attached or not, contact us for advice.
If the sheriff officer thinks that you do not reasonably need an item, they can still choose to attach it. If this happens, contact us for advice.
What happens to the items once they are attached?
Sheriff officers will usually remove any item which is attached immediately. If the item is not immediately removed, they must give you at least seven days’ notice of the date arranged for the removal of the item.
What can I do to challenge an EAO?
You have the right to buy back (redeem) the goods at the value set by the sheriff officer within seven days of the date of the attachment. You also have an opportunity to challenge the EAO.
Within seven days of the attachment, you can apply to the sheriff court requesting that the items should be released from the EAO. You need to use form 28.
You can do this on the grounds that:
the attachment of an item is not ‘competent’ (this means that the correct procedures have not been followed and the EAO is not valid);
an auction of attached items would be ‘unduly harsh’;
goods are of sentimental value and are worth less than £150;
the items were attached at a lot less, or more, than their true market value; or
the value of the items is less than the likely costs of an auction of the goods.
If you are no longer trading and now work for an employer, the council may ask your employer to take regular deductions from your wages to repay the debt you owe. Your employer has a limited time to put the arrestment into practice. The deductions will be made from your ‘net income’. This means the income you have left after taking away tax and national insurance.
The council must send you a Debt Advice and Information Package no earlier than 12 weeks before serving an earnings arrestment. This has to be in the form set by the Scottish Government. It will explain your rights and give you details of how to get advice. If they do not do this, any earnings arrestment will be illegal.
In some situations, your net income will be the income you have left after any pension contributions have been deducted, as well as tax and national insurance. If you are not sure whether this applies to you, contact us for advice.
This is a court order stopping you from selling property such as your house and any land or business premises you own. This is to avoid you getting rid of a major asset and not paying the council. The council needs to apply for a decree (court order) and then serve a charge for payment on you before using this type of diligence. It lasts for five years and then runs out, but the council could ask for it to be renewed. The inhibition will also stop you from taking out further borrowing secured on your property.
If you want to sell your house or business premises, you will have to grant permission for your solicitors to take away the amount owed to the council from the proceeds of the sale of the house after paying the mortgage, estate agent costs and legal fees. The solicitor will need to pay the money to the council in return for them lifting the inhibition and allowing the sale to go ahead.
Different rules for decrees
A decree is very different from a summary warrant and different rules apply. The council would also have to send you a copy of the Scottish Government’s Debt Advice and Information Package before getting an inhibition on your property. If you are being threatened with this type of action, contact us for advice.
Diligence on the dependence
‘Diligence on the dependence’ is an option that creditors can use to protect their interests while they are waiting for the court to grant a summary warrant against you. Once the council has started court action to recover money from you, they can apply to the court for an order to:
arrest money in your bank or building society account;
put an inhibition on your home or business premises to stop you from selling it, or from securing another debt on it; or
stop you from selling or getting rid of certain goods (called an interim attachment).
If you think that the council is trying to take this action against you, contact us for advice.
Business rates and bankruptcy
Petitioning for your own bankruptcy (or sequestration) can be an option for dealing with your debts, including business rates arrears.
There are different types of bankruptcy and different criteria you have to meet to be able to apply if you are an individual living in Scotland. If you owe at least £3,000 to all your creditors, you can apply for bankruptcy if:
you are ’apparently insolvent’; or
you have a ‘certificate for sequestration’.
Apparent insolvency is a legal term meaning that you cannot pay your debts as they become due. If you have received a ‘charge for payment’ for non-payment of business rates and it has expired, you are ‘apparently insolvent’ and could apply for your own bankruptcy. You must get advice from a money adviser before you apply. For more information about finding a money adviser, contact us for advice.
A certificate for sequestration is a formal document confirming that you cannot pay your debts as they become due. It can only be given to you by certain types of money advisers. For more information about how to get a certificate for sequestration, contact us for advice.
You may be able to apply for a special type of bankruptcy if you have:
at least £1,500 but no more than £25,000 of debt;
no assets; and
no money available to pay your debts.
This type of bankruptcy is called the 'minimal asset process'. It is cheaper to apply and your bankruptcy ends more quickly.
If you are the director of a limited company, you can only be held personally liable for business rates if you have given a personal guarantee. If you make yourself bankrupt as an individual, this will deal with your personal liability. However, your company will still owe business rates as a company debt.
Could someone else make me bankrupt?
The council could also try to make you bankrupt. You must owe the council at least £10,000 for them to be able to do this. They must show that you are apparently insolvent.
Bankruptcy is a serious step. Your home, assets and employment could be at risk. If you are considering bankruptcy, contact us for advice.
The term ‘winding up’ describes the process used by a limited company’s creditors to make a company bankrupt. Different rules apply to the winding-up process. Creditors, such as the council, can apply to wind up your company if it owes them £750 or more.
For more information, see our Limited companies fact sheet. If the council is threatening to do this, contact us for advice.
How do I complain?
Complaining about sheriff officers
From 1 April 2011, all sheriff officers are required to be members of the Society of Messengers-at-Arms and Sheriff Officers (SMASO). You can complain to SMASO about the way a sheriff officer has acted. See Useful contacts at the end of this fact sheet for their contact details. Conduct that you may complain about includes where the sheriff officer has:
behaved in an unreasonable way in carrying out their duties; or
exceeded their powers.
Alternatively, you can complain to the Sheriff Principal for the area within which the sheriff officer is acting. If the sheriff officer is found guilty, or admits the offence, then they could be suspended, lose their job or be fined.
When you complain to SMASO or the Sheriff Principal, complain in writing and include details of the sheriff officer and by which council they have been employed. Provide any evidence that you have to support your complaint.
If you complain about a sheriff officer and are successful, this does not always mean that the action the council has taken against you will be stopped or reversed.
If you are considering complaining about a sheriff officer, contact us for advice.
Complaining about the council
You may be able to complain to the Scottish Public Services Ombudsman (SPSO) if the council has not behaved properly or followed the proper procedures.
You will need to complain to your local council first. Do this in writing and keep a copy of your letter. If you are not happy with the council's response you can complain to the SPSO. See Useful contacts.
Institute of Revenues, Rating and Valuation Phone: 0207 831 3505 www.irv.net
Royal Institution of Chartered Surveyors Phone: 0131 225 7078 www.rics.org
Scottish Assessors Association For information about how rateable values are decided www.saa.gov.uk
Scottish Public Services Ombudsman (SPSO) Phone: 0800 377 7330 www.spso.org.uk
Society of Messengers-at-Arms and Sheriff Officers (SMASO) Phone: 0131 228 2866 or 0771 075 4555 www.smaso.org