Whether you’re launching a new venture or relocating your growing team, renting commercial property can be a smart, flexible move. At Fenton & Scott, we help small businesses grow big – starting with the right space and the right advice.
Here’s what you need to know about the legal and tax rules that apply when renting commercial property in Scotland.
Legal Essentials
1. The Lease Agreement
Your lease is a legally binding contract—so read it carefully. Key things to check:
- Length of lease (term)
- Break clauses (can you exit early?)
- Rent review clauses (how and when rent might increase)
- Repair obligations (often called “full repairing and insuring” or FRI leases)
Always get legal advice before signing, especially if you’re a sole trader or new business.
2. Business Rates
Most commercial tenants pay business rates—a local tax based on the property’s rateable value.
- You may qualify for Small Business Bonus Scheme relief if your property’s rateable value is under £15,000.
- Rates vary by council, so check with your local authority or use the Scottish Assessors Association website.
3. Registration of Lease
If your lease is over 20 years, it must be registered with Registers of Scotland. Shorter leases don’t require registration but still carry legal weight.
Tax Considerations
1. VAT on Rent
Some landlords opt to charge VAT on rent—this is called “opting to tax.”
- If VAT is charged, it’s usually at 20%
- You may be able to reclaim VAT if your business is VAT-registered
Always ask upfront whether VAT applies—it can significantly affect your costs.
2. Tax-Deductible Expenses
Rent, insurance, and maintenance costs are typically tax-deductible for your business.
- Keep detailed records for HMRC
- Speak to an accountant to maximise deductions
Tips for Tenants
- Negotiate terms—don’t assume everything is fixed
- Ask about incentives—some landlords offer rent-free periods or fit-out contributions
- Check zoning and permitted use—make sure your business type is allowed in the space
At Fenton & Scott, we don’t just offer properties—we offer support. Whether you’re renting your first office or expanding into new premises, we’re here to help you navigate the process with confidence.
📞 0131 507 0188 📧 property@fentonandscott.com 🌐 www.fentonandscott.com