Partner, Land Management
The Scottish Government’s new policy on sporting rates is a broad-brush approach based on blunt calculation. Find out more about the new rates and how they will affect Scottish landowners.
In the past few weeks, valuation notices have been sent out to all owners of land in Scotland classed as having sporting potential. The reintroduction of sporting rates was intended to raise £4 million per annum to help support the Scottish Land Fund and assist with community land purchases. But there are concerns about the impact of this tax burden on Scottish farmers, estate owners and sporting occupiers.
We take a closer look at the new policy and what it means for landowners in Scotland.
What’s the sporting rates policy all about?
The new policy is a reintroduction of a tax on Scottish farms and estates with shoots and deer forests that was abolished in 1995. It’s been brought back as part of the Land Reform Act 2016 and will be applied to land with shooting potential from 1st April 2017.
The Scottish Government wrote to all landowners asking for details of land use and shooting rights to help determine the rateable value for each farm or estate. Although the methodology for calculating the rates is different to that used in the 1990s, Alex Jameson, Partner in our Perth office, feels there is still room for improvement.
“There is no doubt the Assessors have faced significant challenges. They were given very little time – and scarce comparative rental evidence – to calculate sporting rateable values across thousands of farms, estates and forests in Scotland. Inevitably the calculation is now based on a comparative area basis, which is a blunt method of calculation and bears no relation to the activity on the ground – or lack of it.”
What are the new rates?
Sporting rates are calculated on a per hectare basis as follows:
- Arable – £4.00
- Unimproved grassland – £4.00
- Improved grassland – £3.50
- Deer forest/hill/moor – £2.00
- Woodlands/forestry – £5.00
- Mixed types – £5.00
Alex explains more. “All ground with sporting potential will be assessed, regardless of whether shooting or stalking takes place across it. Yet some rural businesses will have deliberately decided not to make use of sporting potential, for a number of reasons, such as protecting an environmental area, avoiding disruption to farming or tourism ventures or perhaps because it is not economically viable.”
If there are multiple shooting/stalking rights on a piece of land (for example if different parties have rights for deer stalking and pheasant shooting) then this will lead to two entries in the Rates Valuation Roll, with each party paying sporting rates.
How properties can benefit from the Small Business Bonus Scheme
Smaller properties with a rateable value of less than £15,000 are currently exempt from the tax under the Small Business Bonus Scheme (SBBS). The rateable value takes into account all business interests including income from diversification activities, renewables and holiday lets.
Alex Jameson has some additional advice: “Different ownerships on the same property should be split up, which will result in smaller assessments and help with SBBS relief. Additionally, be careful to review other property that might potentially be assessed, now or in the future, including game larders, rearing pens and other related buildings.”
Other allowances and exemptions
Landowners with large areas of sporting land will qualify for a reduction in the rates with a quantum allowance of up to 50% for the largest estates.
Where there are special considerations that may prevent shooting rights being exercised, an allowance of up to 10% may be applied. For example, allowances may be applied where there are restrictions in vehicular access or issues with species protection that restricts shooting. Consideration may also be given to the effect of deer management arrangements.
Alex comments that “The 10% discount may not be sufficient to allow for some limitations.”
Appealing against the valuation
Valuations are meant to be based on the information provided by farmers and estate owners to the Assessors. If the shooting right assessments are not accurate or areas cannot be used for sporting purposes , then it’s up to the landowner to appeal.
“It’s important that these assessments are carefully reviewed and appealed if incorrect and those affected should work together to use comparable evidence effectively,” says Alex.
For landowners wishing to appeal, the advice is to get in early – there’s likely to be a queue.
Questions still to be answered
It’s expected that many landowners will appeal against their valuations and there is widespread uncertainty about the wider economic implications of the reintroduction of sporting rates.
Alex is one of many with unanswered questions. “This much heralded land reform measure raises four key questions. Will the new system withstand the burden of a high number of rating appeals? How much tax will it actually raise in comparison to how much it costs? Will the extra cost of sporting rates reduce employment in the sporting sector? What impact will the rates have on the ability of the Scottish sporting industry to compete with the rest of the UK and abroad?”
The answers to these questions will become clear over the coming months and years and will determine whether the new sporting rates policy is deemed to be a failure or a success.
More detail on sporting rates is available on the Scottish Assessors Association website and in Practice Note 35 which details how the policy will be applied.
To discuss these new rates in more detail, speak to your local Strutt & Parker office: