The transitional arrangements scheme limits the amount by which the business rate bill can increase or decrease as a result of the 2017 non-domestic rating revaluation.

Some increases and reductions will be capped and phased in up to five years until the full bill is due.

Ratepayers whose business rate bills have increased above a certain amount as a result of the 2017 revaluation will have the increase limited and phased in.

Ratepayers whose bills would otherwise have decreased below a certain amount as a result of the 2017 revaluation will also have these reductions limited and the reduction will be phased in.

The transitional arrangements are required to be self-funding. Therefore, the phasing in of the reductions in bills fund the phasing in of the increases of other ratepayers.

These transitional arrangements are applied automatically and are shown on your business rates bill.

The business rate bills for 2017-18 will be capped at the percentage limits in the table below, when compared to 2016.


Property size
Rateable value
1 April 2017
2017/18 percentage cap on increases and reductions
Limit on increases
Small
Up to £20,000
5%
Medium
Up to £100,000
12.5%
Large
Above £100,000
42%
Limit on reductions
Small
Up to £20,000
20%
Medium
Up to £100,000
10%
Large
Above £100,000
4.1%

For instance, a large property whose rates bill has increased as a result of the 2017 revaluation, when compared to 2016, will have the increase limited to 42% on the 2016 bill.

A large property with a decrease in their rates bill, when compared to 2016, will see the reduction capped at 4.1%.

All caps are before inflation. An inflation factor of 2% is also applied for 2017/18.

Transitional calculations are based on the small multiplier and applied before all other reliefs.

The transitional adjustments no longer apply once the full bill is reached.


Example calculation (increase in rates bill 2017/18 - large property)

2010 rateable value £65,000
2017 rateable value £200,000

2016 Bill - £65,000 * small multiplier 48.4p = £31,460.00
2017 Bill - £200,000 * small multiplier 46.6p = £93,200.00

Transitional limit on increase (cap 142.00 * inflation factor 1.02)/100 = 1.44840

2016 Bill * transitional limit (£31,346.00 * 1.44840 = £45,566.66)

Transitional relief applied to 2017 bill £93,200.00 - £45,566.66 = £47,633.34

2017/18 Demand Notice

Rates payable £200,000 x higher multiplier 47.9p = £95,800.00

Less transitional relief £47,633.34

Amount payable: £48,166.66


Example calculation (decrease in rates bill 2017/18 - large property)

2010 rateable value £120,000
2017 rateable value £110,000

2016 Bill - £120,000 * small multiplier 48.4p = £58,080.00 
2017 Bill - £110,000 * small multiplier 46.6p = £51,260.00

Transitional limit on decrease (cap 95.9 * inflation factor 1.02)/100 = 0.978180

2016 Bill x transitional limit (£58,080.00 * 0.978180 = £56,812.69)

Transitional premium applied to 2017 bill £56,812.69 - £51,260.00 = £5,552.69

2017/18 Demand Notice

Rates payable £110,000 * higher multiplier 47.9p = £52,690.00

Plus transitional premium £5,552.69

Amount payable: £58,242.69