Property values can change a lot in the five years between each revaluation, so the Government provides a transitional relief scheme that phases in the impact of the new rateable values. This scheme ensures that dependent on the size of each business, their rate bill will not increase by more than a set amount. To finance this phasing, the Government also limits the amount business rates can reduce by. For 2005/06, the limits for increases and decreases in rate bills are as follows:

 

 

 

Unlike some reductions in your charge, you do not need to apply for transitional relief. It will be worked out automatically and shown on your bill.

 

The starting point for any transitional calculation is the base liability. This is the annual equivalent of the daily charge as at 31/3/05 (generally the 2004 annual rates payable).

The maximum increase in charge for a large property is 12.5% (see example 1 below), and for a small property the maximum increase is 5% (see example 2 below).

 

The maximum decrease in charge for a large property is 12.5% (see example 3 below), and for a small property the maximum decrease is 30% (see example 4 below).

 

Example 1)

Base liability = £64478.40 + 12.5 % = £72538.20 + 3.1% = £74786.88.

Transitional allowance = £3648.12 cr.

The above calculation converts to an appropriate fraction of 1.159875

 

Base liability = £2234.40 + 5% = £2346.12 + 3.1% = £2418.85.

Transitional allowance = £71.15 cr.

The above calculation converts to an appropriate fraction of 1.082550

Large property (RV £78000) x 0.415 = £32370.00 (notional charge)

Base liability = £37848.00 – 12.5% = £33117.00 + 3.1% = £34143.63.

Transitional supplement = £1773.63

The above calculation converts to an appropriate fraction of 0.902125

 

Small property (RV £6100) x 0.415 = £2531.50 (notional charge)

Base liability = £3830.40 – 30% = £2681.28 + 3.1% = £2764.40.

Transitional supplement = £232.90

The above calculation converts to an appropriate fraction of 0.721700