Hundreds of diversified rural businesses face an “existential threat” from new business rates due to take effect from 1 April 2026, Scottish Land & Estates has warned, as farms and estates brace for sharp rises in tax bills.
The organisation said reforms to non-domestic (business) rates in Scotland risk undermining land-based enterprises that have diversified in line with long-standing government encouragement to strengthen rural economies.
Early evidence already highlights the scale of the impact. One business in Argyll faces an increase of almost £50,000 in its rates bill, while another in Aberdeenshire said losing small business relief would push monthly payments from £360 to more than £2,500.
Scottish Land & Estates said several others warned the changes could threaten their viability. Self-catering accommodation providers are expected to be among the hardest hit, alongside cafes, farm shops, visitor facilities, breweries and hotels.
The organisation also warned that small-scale hydro schemes could face rates liabilities up to 10 times higher per megawatt than major windfarms, despite their role in Scotland’s decarbonisation strategy.
Scottish Land & Estates said the reforms could have knock-on effects across rural economies, with suppliers and tradespeople dependent on these enterprises also exposed if diversified operations become unviable.
Anna Gardiner, senior policy adviser for business and property at Scottish Land & Estates, said diversification was essential rather than optional.
“Diversification is not a luxury for rural businesses – it is essential to their survival,” she said, pointing to farms and estates combining agriculture with activities such as self-catering and small-scale renewables that support jobs, tourism and climate goals.
She said the draft revaluation failed to reflect rural realities. “The draft revaluation has completely overlooked these rural economic realities,” she said, adding that the current framework does not recognise the fragile nature of many rural enterprises or the role diversification plays where core farming margins are already tight.
Ms Gardiner said there was no evidence the consequences of changing valuation approaches had been properly assessed and warned that many businesses risk losing protection under the Small Business Bonus Scheme. “It is not simply about putting planned investment on hold – it is an existential threat to many of these enterprises,” she said.
The warning comes against the backdrop of official figures underlining the importance of diversified income. The Scottish government’s Farm Business Income survey shows the average farm recorded a loss of £22,500 from agricultural activities in 2023–24, but generated a profit of £6,200 from diversified activities such as property rental or energy generation.
Scottish Land & Estates said it shared concerns raised by the Federation of Small Businesses, the Association of Scotland’s Self Caterers, Scottish Agritourism and the Scottish Tourism Alliance, and urged ministers to set out how the issue would be addressed.
Ms Gardiner questioned the valuation methodology being applied, particularly for renewables. “For small-scale hydro, it is inexplicable that a scheme can face a rateable value up to twelve times greater per megawatt than a wind farm,” she said, arguing this disparity required urgent scrutiny.
She said businesses now needed clarity from government. “Rural businesses across Scotland now need clarity on what that means in practice, and as soon as possible,” she said, warning that uncertainty was coming at the worst possible time.
With the new valuations due to take effect from April 2026, Scottish Land & Estates said ministers must act quickly to avoid job losses, business closures and the erosion of rural resilience, warning that failure to intervene could accelerate economic decline and depopulation in rural Scotland.
