MSPs have passed an emergency bill designed to fix a legal flaw in Scotland’s non-domestic rates system that left councils without a clear legal basis to charge business rates on thousands of empty properties. The error created the risk of refunds running to around £400 million, threatening a major gap in the 2025-26 Scottish Budget.
The Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill was fast-tracked through Holyrood to retrospectively restore ministers’ powers to levy rates on unoccupied non-domestic properties. Ministers warned that, without the legislation, local authorities could be forced to pay back money collected since April 2023 and lose the ability to bill these properties in future.
In the chamber, the minister leading the bill effectively told colleagues: “We are asking Parliament to fix this mistake swiftly so we can give certainty both to local authorities and to ratepayers.” The minister also stressed that the government remained committed to wider reforms of non-domestic rates, but argued that plugging the immediate legal gap had to come first.
He framed the legislation as a technical correction rather than a change of policy, saying the aim was to give effect to what Parliament had intended when it passed the original 2020 Act. Officials have estimated that, without the fix, refunding overpaid rates could have cost between £300 million and £400 million across several financial years.
Ministers argued that acting under emergency procedures was justified to protect funding for public services, including schools, councils and the NHS. They said allowing a gap in the law to stand would have meant “deep and immediate” cuts to frontline budgets in order to absorb the loss.
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The Scottish Government insisted ratepayers had long understood they were liable for these charges on empty properties and that the bill simply restores the position that had been applied in practice. Official documents describe the measure as ensuring there is “no gap in the law” on liability for owners of unoccupied premises from 1 April 2023 onwards.
Opposition MSPs accepted the need to remedy the mistake but sharply criticised the Government for allowing such an error to pass into law. They warned that the episode undermines confidence in ministers’ handling of tax legislation and places additional uncertainty on businesses already grappling with higher costs.
Business groups and commentators have also raised concerns that the wider system of non-domestic rates for empty properties remains in need of reform, particularly for high streets facing long-term vacancy. While the emergency bill closes off the immediate legal and fiscal risk, pressure is likely to grow for a broader review of how Scotland taxes unoccupied commercial premises.
