Transitional arrangements

Rateable values usually change quite a bit at each revaluation. The aim of the transitional relief scheme is to phase in the increases and decreases affecting rate bills as a result of a revaluation. In 2005 business rate bills cannot increase more than 12.5% for large businesses or 5% for small businesses. The phasing in of increases is paid for by the phasing in of reductions to other businesses’ bills. In 2005 reductions are being limited at 12.5% for large businesses and 30% for small businesses. For the purposes of the transitional scheme small businesses are those with a rateable value of less than £21,500. Different limits will apply for future years after 2005/2006.

Increases are limited as follows:

If the amount you have to pay in a year is higher than the amount you paid in the previous year by more than the percentage shown in the table, your rates will only be increased by the amount shown in the table. However, after these limits have been applied, the bill will still increase in line with inflation.

Decreases are limited as follows:

If the amount you have to pay in a year is lower than the amount you paid in the previous year by more than the percentage shown in the table, your rates will only be reduced by the amount shown in the table. After these limits have been applied, the bill will still increase in line with inflation.

Transitional adjustment is granted automatically  and it will be shown on your bill. Bills may seem to have increased more than the limited amount or reduced less than the percentages shown. This is because an amount is added for inflation, (3.1% for 2005/2006), after the increase/decrease. An extra 0.7% of your rateable value is also added to pay for small business rate relief, unless you qualify for it.