Vape shops in Scotland to be excluded from business rates relief

Vape shops in Scotland are to be excluded from business rates relief, the government has announced.

Deputy First Minister Jenny Gilruth also confirmed an independent review of how the tax is calculated following a huge hike for many companies this year.

The increase led to warnings from some businesses that they would need to lay off staff as they faced six-fold increases.

Gilruth told parliament that the review would address apparent anomalies in some firms' revaluations.

The SNP minister also said there should be a timely system of appeals and a general review of the role of assessors.

Opponents called for more radical action and questioned why business rates reforms had not been brought forward.

Business rates - officially called non-domestic rates in Scotland - are set by the Scottish government, though they are collected by councils to fund local services.

The levy is charged on business properties such as shops, offices, factories and warehouses, with the rate based on their rental value.

As of 1 April, new rateable values were introduced for all 260,000 rated non-domestic properties in Scotland, leading to a tax hike for many firms.

In the 2026-27 Budget, the Scottish government cut business rates in a bid to cushion the effect of revaluations.

Other transitional reliefs were also introduced, including an extension of the Small Business Bonus Scheme, which allows some firms to get up to 100% tax relief.

Payday lending firms, car parks, betting shops and some other businesses are already excluded such reliefs, but the government says it will also ban vape shops from reliefs as of 1 April 2027.

The Scottish government will also appoint an independent panel to examine the outcome of the 2026 non-domestic property revaluation, following reports of inconsistent valuations.

The panel will assess whether there were any anomalies in the revaluations and report within three months of being appointed.

Gilruth said: "Ministers have heard the concerns raised by businesses and trade bodies about apparent anomalies within the 2026 revaluation, and that is why we are taking urgent action.

"This includes taking action to ensure vape shops are contributing to the high street, recognising the growth of the sector in recent years and ensuring rates relief aligns with our public health commitments."

Guy Hinks, Scotland chairman of the Federation of Small Businesses welcomed action to "address some of the deeply unfair and perplexing anomalies thrown up by the recent rates revaluation".

He added: "Simplifying the opaque and overly complex assessors system which administers the rates regime reflects what we have been saying for many years."

Responding to Gilruth's statement in parliament, Labour's Daniel Johnson expressed disappointment that more "radical" reforms were not being considered.

Reform UK Scotland's Max Bannerman said this year's business rates cuts did not prevent "unaffordable" rises for many firms, calling for "meaningful" changes instead of "tinkering around the edges".

Scottish Green co-leader Ross Greer said the Scottish government was spending more than £200m a year on "untargeted" reliefs and said the system was "not working".

He told parliament that non-domestic rates were not based on a company's ability to pay, calling for profit or turnover to be considered alongside property value.

Scottish Conservative MSP Craig Hoy said businesses that were "going to the wall" did not want more reviews.

"They want urgent action to reduce their bill and have greater understanding of how the system actually operates," he told MSPs.

LibDem Liam McArthur said "eye-watering" tax hikes had posed "an existential threat" to many companies.

He called for the way the rax was calculated to be revised for self-catering properties to enable a more proportionate approach.