Earlier this year we advised that the Scottish Government passed legislation which exempts day nurseries from business rates for three years with effect from 1 April 2018. However, recent investigations on behalf of clients have shown that a number of local authorities are trying to resist granting this relief to the larger operators on the basis that it constitutes 'State Aid'.

State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities. Therefore, where a public body provides financial support (such as rates relief), it is necessary to consider whether such support constitutes State Aid. Financial support granted must also meet all the conditions set out in the European Community (EC) Treaty for it to be considered as State Aid. The EC Treaty declares that State Aid, in whatever form, which could distort competition and affect trade by favouring certain undertakings or the production of certain goods, is illegal.

However, small amounts of financial support (less than €200,000 to any undertaking over any rolling three year period) are considered to be 'de minimis', i.e minimal, non-consequential amounts. This aid, such as rates relief, may be given without the need for notification or approval, though records of aid granted must be maintained.

For many nursery operators, such as those with only one property or properties with relatively low rateable values, this is unlikely to impact on them as the total rates relief received is less than €200,000 (equivalent to £177,611 as at 29 October 2018) over a 3 three year period.

However, for those with larger premises or more than one property, this is a serious consideration and clarification should be sought on how to mitigate the impact of this on their business. If you are currently receiving, or are eligible for more than £60,000 per year in rates relief, either over one or several properties, this is likely to be relevant to you and you should seek professional advice.

We have a number of mitigation strategies in place; it’s even more important now that you take professional advice and have an advisor on board in respect of business rates going forward.

If you wish to discuss any aspect of rates relief on nursery properties, please do get in touch.