20,000 Scots businesses close during pandemic year

The number of private sector businesses operating in Scotland fell almost 20,000 in the year to March 2021 to 344,505, according to the Scottish Government’s latest “Businesses in Scotland” report.

Almost all of the 344,505, businesses — 98.2% — were small, with 0 to 49 employees.

Between March 2020 and March 2021, the estimated number of businesses in Scotland decreased by 5.4% or 19,805 businesses.

The decrease was driven by a reduction in the number of unregistered businesses — those not big enough to be registered for VAT and/or PAYE.

The number of unregistered businesses fell from 184,850 as at March 2020 to 165,835 as at March 2021 – a decrease of 19,015 unregistered businesses.

Unregistered businesses are sole proprietorships and partnerships that are not large enough to be VAT registered, with an annual turnover below the VAT threshold — £85,000 as at March 2021 — and are not PAYE registered because they do not employ others.

As at March 2021, unregistered businesses represented 48.1% of all private sector businesses in Scotland.

There were 342,125 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs.

SMEs accounted for 99.3% of all private sector businesses in Scotland, 55.1% of private sector employment and 40.3% of private sector turnover as at March 2021.

A Scottish Government spokesperson said: “This reduction clearly reflects the impact of the coronavirus (Covid-19) pandemic and is part of an overall reduction of almost 390,000 business across the whole of the UK.

“We know how difficult the pandemic has been for business and that is why we are doing all we can to support them recover.

“On top of the £4.4 billion of support given during the pandemic, we are now taking forward a range of measures to ensure businesses have access to the services, skills and opportunities to help them continue to operate and prosper.”