Best Tax Increment Financing Lawyers in Stonehaven

About Tax Increment Financing Law in Stonehaven, United Kingdom

Tax Increment Financing in Scotland is commonly referred to as Tax Incremental Financing. It is a public finance tool that allows a local authority to borrow to deliver enabling infrastructure, then repay the borrowing using the future growth in non-domestic rates that arises within a defined area as a result of that investment. Stonehaven sits within Aberdeenshire Council in Scotland, so the Scottish framework applies. A Tax Incremental Financing scheme requires a defined red line area, a baseline of existing non-domestic rates, and an agreed mechanism that allows the council to retain the incremental non-domestic rates above that baseline for a set period to service debt on the infrastructure. Scottish Ministers approval is required for a formal Tax Incremental Financing scheme. Not every town has an active scheme, and availability in Stonehaven depends on a council proposal and government approval.

In practice, Tax Incremental Financing is used to unlock regeneration and growth where private development is commercially constrained by up front infrastructure costs. Typical enabling works include roads and junctions, flood and coastal protection, utilities, site remediation, transport interchanges, and public realm. The approach can be combined with other funding such as developer contributions and city region deal investment, but it must comply with public finance, procurement, planning, and subsidy control rules.

Why You May Need a Lawyer

Tax Incremental Financing projects are complex. You may benefit from legal advice if you are a developer seeking certainty on infrastructure delivery and repayment mechanisms, a landowner affected by land assembly or changes to access, an investor or lender assessing security and revenue risk, a business considering relocation into a Tax Incremental Financing area, or a community group engaging with regeneration proposals. Lawyers help structure the project, allocate risk, and ensure compliance with the Scottish legal framework.

Common legal tasks include negotiating the heads of terms and detailed agreements between the council, the developer and any guarantors, advising on the formation and governance of special purpose vehicles, drafting funding and intercreditor documents, confirming title and property rights, arranging site access and wayleaves, addressing compulsory purchase risks, advising on planning permission and Section 75 obligations, ensuring procurement compliance for works and services, managing environmental and flood risk consents, checking compliance with subsidy control rules, assessing tax and VAT treatment, handling freedom of information and confidentiality, and resolving disputes about delivery, milestones, cost overruns or performance metrics.

Local Laws Overview

Non-domestic rates in Scotland are governed by Scottish legislation and policy. A Tax Incremental Financing scheme relies on the retention of the growth in non-domestic rates from a defined area against an agreed baseline for a fixed term. The baseline, forecasting methodology, retention period, and reporting obligations are set out in an approved business case and ministerial direction. Any proposal in Stonehaven would be led by Aberdeenshire Council under this framework and would require Scottish Government approval.

Local authority borrowing and capital finance in Scotland are governed by the Local Government in Scotland Act 2003 and the CIPFA Prudential Code. The council must demonstrate that borrowing is prudent, affordable and sustainable. The Scottish Public Finance Manual and local treasury management policies will influence structure and monitoring.

Planning is governed by the Town and Country Planning Scotland Act 1997 as amended and related regulations. Infrastructure delivery often interacts with planning permissions, the Aberdeenshire Local Development Plan, transport appraisals, and Section 75 planning obligations. In Scotland there is no Community Infrastructure Levy. Developer contributions are typically secured through Section 75 agreements and conditions. A Tax Incremental Financing mechanism does not replace planning obligations but can complement them to deliver strategic infrastructure earlier.

Subsidy control has applied in the United Kingdom since the Subsidy Control Act 2022. Where public money confers an advantage on enterprises, the project must satisfy the subsidy control principles, and larger or higher risk subsidies may require assessment by the Subsidy Advice Unit. Structuring a Tax Incremental Financing scheme so that it is compliant, proportionate, and transparent is essential.

Procurement must comply with the Procurement Reform Scotland Act 2014, the Public Contracts Scotland Regulations 2015 and relevant guidance. Works, services and concessions let by the council or a project vehicle must be tendered lawfully. Failure to do so risks challenge, delay and financial consequences.

Environmental law is often engaged. Major works may require screening and scoping under the Environmental Impact Assessment Regulations, habitats assessment, marine licences for coastal works, flood risk assessment in line with the Flood Risk Management Scotland Act 2009, and permits from regulators such as SEPA. Early environmental due diligence can prevent material delays.

Land assembly and access are critical. Property due diligence will consider title burdens, servitudes, mineral rights, contamination liabilities, historic environment constraints and leasehold issues. Where voluntary acquisition is not possible, compulsory purchase can be considered under planning and roads powers with appropriate procedures, compensation and inquiries.

Governance and reporting are integral. Tax Incremental Financing arrangements typically include a business case with benefit cost analysis, defined outputs, monitoring of non-domestic rates performance against forecasts, and a mechanism for addressing underperformance, such as step in rights, revised phasing, or use of reserves. Interaction with Business Improvement Districts, local rate reliefs and revaluation cycles should be factored into modelling.

Frequently Asked Questions

What is Tax Incremental Financing in Scotland and how could it apply to Stonehaven

It is a way for a council to fund infrastructure now and repay the borrowing using future growth in non-domestic rates from a defined area. If Aberdeenshire Council identified a suitable Stonehaven project and secured Scottish Government approval, the non-domestic rates generated by new or expanded businesses in the area above a baseline could be retained for a period to service project debt.

Does Stonehaven currently have an active Tax Incremental Financing district

As of the time of writing there is no widely publicised active Tax Incremental Financing district in Stonehaven. Availability depends on a council proposal that meets Scottish Government criteria and receives ministerial approval. You should confirm the current position with Aberdeenshire Council.

Who ultimately pays for a Tax Incremental Financing scheme

The borrowing is repaid from the incremental non-domestic rates generated within the defined area. Council tax is not used. If the increment underperforms, the legal agreements will set out who bears the shortfall risk. This risk can sit with the council, be shared with developers through guarantees, or be mitigated through phasing, reserves and conservative forecasting.

How long does a Tax Incremental Financing arrangement last

The term is set in the approved business case and ministerial direction, commonly up to around 20 to 25 years from the baseline date. The term must be long enough to generate sufficient incremental rates to repay borrowing but short enough to be prudent and compliant with policy.

What types of infrastructure can Tax Incremental Financing pay for

Eligible spending typically includes enabling works like roads, junctions, bridges, flood and coastal protection, utilities diversions and reinforcement, site remediation, public transport improvements and public realm that directly support new business space and economic activity. Revenue running costs are generally excluded.

How is the increment measured

A baseline of non-domestic rates within the defined area is fixed at an agreed date. Future non-domestic rates are measured each year, adjusted for reliefs and valuation changes, and the amount above the baseline is the increment. The business case must set out forecasting methods, assumptions about values and build out, and how revaluations, appeals and reliefs are handled.

What are the core legal documents in a Tax Incremental Financing structure

Key documents often include the ministerial approval or direction, a council resolution and prudential borrowing reports, a detailed business case, a project agreement between the council and developer, funding and security documents, direct agreements with contractors, a monitoring and reporting protocol, land transfer or option agreements, and if needed, a Section 75 planning obligation setting out developer contributions and triggers.

How does Tax Incremental Financing interact with planning permission and Section 75

Planning permission is still required for development. Section 75 agreements can secure site specific mitigation and contributions. Tax Incremental Financing can fund strategic infrastructure that benefits multiple sites, allowing earlier delivery. The two tools should be coordinated so that there is no double charging and so that triggers align with the phasing of Tax Incremental Financing funded works.

What are the main risks for developers and lenders

Risks include shortfall in the rates increment due to slower development, lower values, vacancies or rating appeals, construction cost inflation or delays, procurement challenges, environmental constraints, and changes in law or policy. Developers may be asked for completion guarantees, minimum letting covenants, or overage. Lenders will focus on security, step in rights, and the robustness of the rates forecast and legal protections.

Is Tax Incremental Financing the same as a Business Improvement District or the Growth Accelerator Model

No. A Business Improvement District is a levy raised from local businesses for agreed services. The Growth Accelerator Model is a separate Scottish approach that ties government payments to delivery of agreed outcomes. Tax Incremental Financing uses retained growth in non-domestic rates within a defined area to repay borrowing. A project can sometimes combine these mechanisms where appropriate and lawful.

Additional Resources

Scottish Government guidance on Tax Incremental Financing and related economic development funding.

Aberdeenshire Council Economic Development and Infrastructure Services for local policy, business case development, and project sponsorship.

Scottish Futures Trust for infrastructure finance models and business case support.

Registers of Scotland for title information, plans, and land registration issues affecting project sites.

Planning Authority resources including the Aberdeenshire Local Development Plan, development management policies, and transport guidance.

Scottish Public Finance Manual and CIPFA Prudential Code for borrowing and affordability requirements.

Subsidy Control guidance and the Subsidy Advice Unit for assessing compliance of public support.

Scottish Procurement and the Public Contracts Scotland portal for procurement policy and tendering routes.

SEPA and NatureScot for environmental permits, flood risk, habitats and natural heritage advice.

Professional bodies and industry groups with experience in Scottish infrastructure and regeneration finance.

Next Steps

Define objectives clearly. Identify what infrastructure is needed in Stonehaven, what developments it will unlock, and how that translates into business space and jobs.

Engage early with Aberdeenshire Council. Discuss whether a Tax Incremental Financing approach aligns with local economic strategy and the Local Development Plan, and whether the council is prepared to sponsor a proposal.

Commission feasibility work. Instruct advisors to prepare an outline business case including site plans, cost estimates, delivery phasing, non-domestic rates forecasting, sensitivity analysis, and risk allocation options.

Map the legal pathway. Ask a Scottish projects and planning lawyer to set out required consents, procurement strategy, land assembly options, planning permissions and Section 75 needs, subsidy control compliance, and the suite of agreements to be negotiated.

Structure funding. Consider how Tax Incremental Financing interacts with developer equity, senior debt, grant, and other sources such as city region deal funding. Build in contingencies and reserves to manage underperformance.

Plan stakeholder engagement. Prepare a community and business engagement plan, and coordinate with statutory consultees on environment, transport and heritage at an early stage.

Agree governance and monitoring. Establish how performance against the baseline will be measured, how information will be shared, and what happens if milestones are missed or forecasts change.

Seek approvals. Work with the council to secure internal approvals, submit the business case to the Scottish Government, and address feedback to reach ministerial approval.

Procure and deliver. Once approvals are in place, implement a compliant procurement strategy, complete land assembly, and deliver enabling works in line with the agreed phasing and reporting.

Important note. This guide is for general information only and is not legal advice. For advice on a specific Stonehaven Tax Incremental Financing proposal, consult a qualified Scottish legal adviser.