Best Tax Increment Financing Lawyers in Aberdeen

About Tax Increment Financing Law in Aberdeen, United Kingdom

Tax Increment Financing in Scotland, often called TIF, is a public finance tool that allows a local authority to fund upfront infrastructure by borrowing against the future growth in non-domestic rates generated by new development within a defined area. It is not a new tax and it does not raise existing business rates. Instead, it ring-fences part of the additional business rates income that would not have arisen without the project. That additional income is used over an agreed period to repay the borrowing that funded roads, utilities, land remediation, public realm, or other enabling works.

In Scotland, TIF is enabled through agreements between a local authority and the Scottish Ministers, supported by Scottish Government guidance. It operates within the Scottish non-domestic rates system, which is devolved and distinct from the system in England and Wales. Aberdeen City Council, like other Scottish councils, can explore TIF-style arrangements where appropriate and may also use related models, such as the Growth Accelerator model, to support strategic regeneration and economic development. Any TIF in Aberdeen must align with national policy, local development plans, and a robust business case that shows the infrastructure will catalyse investment and generate new rateable value.

TIF sits alongside other tools such as planning obligations under Section 75 of the Town and Country Planning (Scotland) Act 1997, city region deal funding, and developer-led financing. It is one part of a broader toolkit for delivering complex regeneration and is usually deployed only where there is a clear market failure or funding gap and a credible pathway to rate growth.

Why You May Need a Lawyer

Tax Increment Financing involves a network of legal, financial, and regulatory issues that benefit from specialist advice. A lawyer can help structure the TIF arrangement, negotiate the TIF agreement with the Scottish Ministers, and ensure the local authority’s borrowing and governance comply with Scottish public finance law and the Prudential Code. For developers and investors, legal counsel can assess risk allocation, security, step-in rights, and repayment waterfalls under project agreements.

Legal input is often required to navigate planning permissions, Section 75 obligations, roads and utilities consents, land acquisition and assembly, and, if necessary, compulsory purchase procedures. Procurement strategy is critical, since most TIF-funded works are subject to the Procurement Reform (Scotland) Act 2014 and the Public Contracts (Scotland) Regulations 2015. Lawyers also advise on subsidy control compliance under the UK Subsidy Control Act 2022, which replaced EU state aid rules, and they address information law implications, including freedom of information and confidentiality in commercial negotiations.

Specialist lawyers add value by coordinating with technical advisers on financial modelling, ensuring the treatment of VAT, construction risk, rating valuation assumptions, and environmental liabilities is consistent and documented. If disputes arise around delivery, payment mechanisms, milestones, or performance, lawyers can advise on resolution strategies that protect the project’s viability and the parties’ interests.

Local Laws Overview

In Aberdeen, TIF must be designed within Scotland’s devolved framework for non-domestic rates and local authority finance. The Scottish Government sets the legal and policy basis for TIF through specific agreements, guidance, and relevant regulations made under the Local Government Finance Act 1992 as it applies in Scotland. The local authority’s borrowing and capital finance must comply with the Local Government in Scotland Act 2003, the Prudential Code published by CIPFA, and the authority’s own governance rules and standing orders. Business rates policy, including the poundage and reliefs, is set at the Scottish level, while Aberdeen City Council administers billing and collection.

Planning and land use are governed by the Town and Country Planning (Scotland) Act 1997, National Planning Framework 4, and the Aberdeen Local Development Plan. Section 75 agreements are commonly used to secure site-specific mitigation and developer contributions alongside or separate from TIF-funded infrastructure. Transport and roads works may require approvals under the Roads (Scotland) Act 1984 and engagement with Transport Scotland. Environmental assessments may be required under the Environmental Impact Assessment Regulations for Scotland, and flood risk or environmental permitting issues may involve the Scottish Environment Protection Agency.

Public procurement obligations apply to most TIF-funded contracts, requiring transparent and compliant procedures proportionate to contract value and market conditions. Projects must also comply with the UK Subsidy Control Act 2022, with documentation that the measure is consistent with the subsidy control principles and, where appropriate, engagement with the Subsidy Advice Unit. Governance and transparency requirements, including the Freedom of Information (Scotland) Act 2002 and records management duties, will shape how agreements are drafted and information is shared. Business case development typically follows the Five Case Model based on Green Book methodology, adapted to Scottish guidance and the Scottish Public Finance Manual.

The Growth Accelerator model, used in Scotland as an alternative or complement to TIF, can assign a share of additional non-domestic rates and other outcomes-based payments to fund enabling infrastructure. Whether using classical TIF, Growth Accelerator, or a hybrid, Aberdeen projects must demonstrate additionality, value for money, affordability, and deliverability within the Scottish finance and planning context.

Frequently Asked Questions

What is Tax Increment Financing and how would it work in Aberdeen?

Tax Increment Financing is a way to fund enabling infrastructure by borrowing now and repaying the debt from future growth in non-domestic rates within a defined area. In Aberdeen, a TIF would be based on an agreement with the Scottish Ministers that ring-fences part of the new rates generated by development that the infrastructure makes possible. The council would use that ring-fenced increment over an agreed period to service the borrowing.

Does TIF increase my business rates bill?

No. TIF does not change the rates poundage or how your individual bill is calculated. It redirects part of the additional rates collected from new or expanded properties within a designated area to repay infrastructure debt. Your bill is determined under the Scottish non-domestic rates system in the usual way.

Who decides whether a TIF scheme can proceed?

The local authority prepares the business case and seeks approval from its elected members. The Scottish Ministers decide whether to approve the ring-fencing and retention of incremental rates for a defined area and period. Detailed terms are set out in a TIF agreement between the council and the Scottish Ministers.

How is the TIF area defined?

The TIF area is a mapped red-line boundary drawn to capture developments expected to result from the infrastructure. It must be evidence-based and tied to the business case. Changes are tightly controlled and would require agreement with the Scottish Ministers, because the definition underpins the financial model and risk allocation.

What happens if the projected rates growth does not materialise?

This is a core risk. The council remains responsible for its borrowing and must manage shortfalls through reserves, rephasing, or alternative funding. The financial model should include downside scenarios, contingency, and covenants. Contracts with developers may include mechanisms to reduce exposure, but ultimately the public body bears the financing duty, so risk management is central.

How does TIF interact with planning obligations under Section 75?

TIF is not a substitute for site mitigation that should be secured through Section 75. It typically funds wider enabling works that unlock multiple sites or the city centre, while Section 75 focuses on development-specific impacts. The two need to be coordinated so that there is no double charging and so that funding sources are sequenced sensibly.

Are there competition or subsidy control issues?

Yes. Public funding that benefits particular developments can constitute a subsidy. The project must comply with the UK Subsidy Control Act 2022, including assessment against the subsidy control principles and consideration of cumulation with other support. Larger or novel cases may require referral or additional scrutiny. Legal advice helps document compliance and reduce challenge risk.

What procurement rules apply to TIF-funded works?

Most infrastructure and related services will be procured under the Procurement Reform (Scotland) Act 2014 and the Public Contracts (Scotland) Regulations 2015. The council must follow fair, transparent, and proportionate procedures, and include community benefits and sustainability where appropriate. Early procurement strategy alignment with the TIF timetable is essential.

Can TIF pay for any kind of project cost?

TIF is focused on enabling infrastructure that can credibly drive new rateable development, such as roads, bridges, utilities, land remediation, flood works, and public realm that improves viability. It does not usually cover purely private fit-out or ongoing operational costs. Eligibility is tested against the business case, value for money, and the agreed TIF scope with the Scottish Ministers.

How long do TIF arrangements last?

The retention period is defined in the TIF agreement and is commonly a long term, often up to around 25 years from a defined start point, to allow the increment to build and repay borrowing. The precise duration depends on ministerial approval, the business case, and affordability constraints.

Additional Resources

Scottish Government non-domestic rates policy and TIF guidance teams can provide policy context and approval processes. The Scottish Futures Trust offers technical guidance on TIF and the Growth Accelerator model and can act as a strategic adviser to the public sector.

Aberdeen City Council departments responsible for finance, city development, planning, roads, and business rates are key contacts for local requirements, timetables, and pre-application discussions. The Aberdeen City Region Deal structures can provide alignment with broader economic objectives.

The Law Society of Scotland can help you find solicitors with expertise in public sector finance, planning, procurement, and subsidy control. Registers of Scotland provides land and title information needed for site assembly. The Scottish Public Procurement resources, including the Procurement Journey, explain procedural expectations for contracting authorities.

CIPFA’s Prudential Code and guidance on local authority capital finance set guardrails for borrowing and affordability. For subsidy control queries, the Competition and Markets Authority’s Subsidy Advice Unit provides guidance on the UK regime. Business Gateway Aberdeen City and Shire can support local enterprises engaging with regeneration opportunities.

Next Steps

Begin by defining the problem your project must solve and the infrastructure required to unlock development. Engage early with Aberdeen City Council to understand planning policy, local development plan priorities, roads and utilities constraints, and whether a TIF or Growth Accelerator route is potentially suitable. Request a pre-application meeting to align expectations on evidence, timescales, and governance.

Commission a robust business case using the Five Case Model, supported by market analysis and an independent non-domestic rates forecast that distinguishes genuinely additional rateable value. Map a realistic delivery timeline that accounts for design, statutory consents, procurement, land acquisition, and phasing. Build scenarios that test downside performance and identify mitigations.

Instruct specialist legal counsel to structure the TIF arrangement, advise on borrowing powers and prudential indicators, draft or review the TIF agreement and related project documents, confirm procurement strategy, and assess subsidy control compliance. Coordinate tax, rating, property, environment, and construction advisers so that the financial model and legal documents align. Prepare a stakeholder engagement plan that addresses businesses, landowners, communities, and statutory bodies.

Once the project structure is confirmed, agree heads of terms with counterparties, finalise the legal documentation, and secure internal committee approvals and, where required, Scottish Ministerial approvals. Maintain a live risk register, ensure clear reporting lines, and set up monitoring for rate growth, delivery milestones, and covenant compliance. If you need immediate legal help, gather core documents such as site plans, title reports, planning history, early designs, and any financial models, then contact a solicitor experienced in Scottish TIF and public sector infrastructure to review and advise on your position.

This guide is general information and not legal advice. Always take advice from a qualified Scottish solicitor on your specific circumstances.