Renewable Energy Generation Rates Relief.
Date: 08/11/2013 | Energy & Natural Resources
Are you paying Non Domestic Rates on property generating Renewable Energy? You may be paying too much!
The Basic Terminology
The Scottish Assessor determines the classification of properties as domestic (i.e. residential, that is, liable to Council Tax) or non-domestic (i.e. non-residential). All deemed non-domestic properties are valued to establish their rateable value by the Scottish Assessor and this rateable value is then entered on the Valuation Roll. The occupier of a non-domestic property normally pays ‘Non Domestic Rates’ (as opposed to Council Tax). However, certain types of property are exempt such as agricultural land and buildings and other types of rates relief may be available, depending on the nature of the property’s main use. For example the Renewable Energy Generation Relief Scheme, discussed in more detail below, is available for occupiers who are solely concerned with the production of heat and/or power from certain renewable sources.
Rateable Value
The Scottish Assessor assigns all non-domestic property in Scotland a rateable value broadly based on an analysis of annual rental values – what the annual rental value of the property would be, if it were leased.
The Assessor will compare a range of property information and study the rental market in depth to ensure that rateable valuations are accurate, consistent and reflect the individual characteristics of each property (such as plant and machinery installed thereon). The Scottish Assessor’s Association holds ‘practice notes’ in relation to assessing properties used for specific purposes, or featuring specific types of plant and machinery (e.g. Practice Note on Electricity Generation Lands – Valuation of On-Shore Turbines/Wind Farms found on the Scottish Assessors Association website).
Please note: Certain items of plant and machinery defined as having ‘micro-generation capacity’ (that is, wind powered generating subjects with a generating capacity of 50kW or less) are excluded from valuation for rating.
Rates
Rates are based on a proportion of the rateable value, and this percentage is set annually by Scottish Ministers and is called the poundage (at 46.2 pence from 1 April 2013 until 31 March 2014). However, in 2013-2014, non-domestic properties with a rateable value in excess of £35,000 will pay a poundage supplement of 0.9 pence, resulting in a total poundage rate of 47.1p for this year.
The Renewable Energy Generation Relief Scheme
The Renewable Energy Relief Scheme, established in 2010, is an ‘opt-in’ scheme. This means that the occupier of the property must APPLY for the relief (via a brief and straightforward application form, available on the local authority’s website), as it is not deducted automatically from the rates payable on a property. The relief can reduce the rate payable by up to 100%, for occupiers who are solely concerned with the production of heat or power (or both) from the following sources:
- Biomass
- Biofuels
- Fuel cells
- Photovoltaics
- Water
- Solar power
- Geothermal Source
The available reliefs are as follows:
| The Cumulative Rateable Values of Non-Domestic Property in Scotland |
Relief (%) |
| Up to 145,000 |
100% |
| Up to £430,000 |
50% |
| More than £430,000 to £860,000 |
25% |
| More than £860,000 to £4,000,000 |
10% |
| Greater than £4,000,000 |
2.5% |
Eligibility
In general, when assessing eligibility for Renewable Energy Generation relief, four criteria will be considered by the local authority:
1. Whether the non-domestic property is solely concerned with the generation of heat or power by the means listed above;
2. Whether the property is in receipt of any other relief;
3. The level of other public sector assistance received by the non-domestic property; and
4. The rateable value of the non-domestic property.
Please note that this has been a very general overview of the Non Domestic Rates position for renewable energy producing properties in Scotland. If you have any further questions, please contact us, or contact your local authority, or the Scottish Assessors Association.
Further Information.
If you would like further information then please contact Andy Drane on 0131 625 9191 or email andy.drane@davidsonchalmers.com.
Disclaimer
The matter in this publication is based on our current understanding of the law. The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.
