According to the SRC, the Scottish retail sector continues to struggle. Credit: William Barton via Shutterstock.

Businesses in Scotland are set to be hit with a cumulative £125m ($158.6m) bill over the next two years due to a unique tax, according to the Scottish Retail Consortium (SRC).

The Higher Property Rate (HPR), which applies exclusively to Scotland, adds an extra burden on medium-sized and larger commercial properties compared to similar businesses in England.

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The SRC estimates this difference will cost Scottish companies £62.75m in the coming year alone.

Calls for parity with England

The HPR tax was introduced in 2016 and has been criticised for harming Scotland’s competitiveness.

The Barclay Rates Review, commissioned by the Scottish Government, called for parity with England to be restored by 2020.

However, the Scottish Government has now pledged to do so only by the end of the current parliamentary term in 2026.

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The SRC is urging the national government to accelerate this timeline, highlighting the strain the HPR places on businesses already facing challenges.

Impact on retail sector

The retail sector is particularly affected by the HPR, with an estimated £9.7m in annual surcharge.

This comes at a time when Scottish retail sales are stagnant, vacancy rates are high, and footfall remains below pre-pandemic levels.

The SRC argues that the HPR adds to the existing cost burden on retailers and hinders their ability to invest and grow.

‘Level playing field’ needed

David Lonsdale, director of the SRC, stated:

“Shops and other businesses liable for the Higher Property Rate in Scotland continue to pay more than their counterparts in England, to the tune of £63m annually. This discrepancy is set to continue for a ninth consecutive year from April, four years past the timeline recommended by the government’s own Barclay Rates Review.

“This higher business rate makes it more expensive to operate a shop on our high streets and retail destinations. It holds back commercial investment and hampers retailers’ ability to become more productive.

“We need to see ministers commit to restoring the level playing field with England and delivering it at a faster pace.”

The SRC’s call comes amid wider concerns about the health of the Scottish retail sector and the need for policies that support its growth and competitiveness.