Scottish retailers will pay £162m more in business rates than similar businesses in England over the next three years, according to analysis from the British Retail Consortium.
The figures highlight a widening gap in non-domestic rates and its implications for retail investment and competitiveness across the UK.
Industry data shows the difference amounts to around £54m per year, driven by higher tax rates on medium and large retail properties in Scotland. The findings add to ongoing concerns about uneven operating costs between regions.
Rates gap widens
The report attributes the disparity to differences in business rates policy between Scotland and England, particularly for properties with a rateable value above £100,000. These stores are subject to Scotland’s Higher Property Rate and are not eligible for key reliefs available elsewhere.
David Lonsdale, Director of the Scottish Retail Consortium, said ministers had “made headway on business rates” by introducing relief for retail, hospitality and leisure businesses. He noted that the Scottish Government had “recognised that retailers pay a disproportionate amount in business rates”.
However, he added that the current system “falls well short of what is required”, pointing to “convoluted restrictions and cap on eligibility” that limit the reach of the relief.
Limits of current relief
The Retail, Hospitality and Leisure relief in Scotland provides some support, but its capped structure reduces its value for many operators. Larger stores, which account for a significant share of retail floorspace, do not benefit from the scheme.
Lonsdale said the relief “won’t benefit all stores” and is “less generous at every level compared to the relief on offer to retailers in England”. He added that medium-sized and larger stores “will pay a business rate substantially above that of similarly-sized counterparts down south”.
This creates a tiered system in which smaller premises receive support, while larger stores face higher fixed costs. For many retailers, property taxes remain one of the largest operating expenses.
Impact on investment decisions
The report warns that sustained differences in business rates could affect where retailers choose to invest. Higher costs in Scotland may influence decisions on store openings, upgrades and long-term leases.
Lonsdale said there is a risk that Scotland becomes “a materially less competitive place to operate shops”, with concerns this “could see a shift in investment down south”. He stressed that continued investment is “essential to keep them viable and attractive to customers”.
He also pointed to the regional impact, noting it would not support the wider economy if businesses were “incentivised to invest in Berwick-upon-Tweed over Bothwell, Buckhaven, or Blairgowrie”.
The findings have prompted calls for further policy action. Lonsdale said “a far more ambitious approach is required” from future policymakers, including measures that “ensure a competitive level playing field with England”.
The analysis underscores growing pressure on governments to address regional differences in business rates as retailers weigh costs and investment priorities across the UK.
