Have your business rates recently changed and you’re wondering why your bill hasn’t jumped as expected? Or maybe you’ve seen an unexpected cap on your new charge? This could be due to transitional relief on business rates. It’s a scheme that helps smooth out big changes to your business rates when a new valuation list is published. This guide breaks down what transitional relief is, who qualifies, how it’s calculated, and what happens once it ends.
Transitional relief is a government scheme that limits how much your small business rates bill can go up or down each year following a property revaluation. The aim is to make changes more manageable, preventing a sharp spike in costs after your rateable value is reassessed.
When revaluations happen—typically every few years—some properties see large increases or decreases in their rateable value. Transitional relief on business rates ensures that businesses don’t face financial shocks from immediate large increases or lose existing support too quickly if their bills drop.
The government sets limits—known as caps—on how much your rates bill can increase or decrease annually. These caps are phased over time. If you qualify, you don’t need to apply; your local council or Land and Property Services (LPS) will apply the relief automatically.
Here’s an example of how the caps typically work for businesses seeing an increase in their rateable value:
These percentages vary depending on the size of the business and the rateable value of the property. Decreases in rates may also be phased in more slowly under certain schemes.
Transitional relief is usually triggered when the government publishes a new rating list following a nationwide revaluation. If your property’s rateable value changes significantly—either up or down—you may see the effects of transitional relief reflected in your rates bill for the year starting 1 April of the revaluation year.
Yes, in most cases. Your council or LPS will apply transitional relief on business rates directly to your bill. There’s no need to apply separately. But it's wise to check your statement and contact them if it seems incorrect.
Transitional relief on business rates limits how much your rates bill can rise or fall each year after a revaluation. It’s automatically applied and helps ease financial pressure from sharp rate changes.
Let’s say your rateable value rises from £10,000 to £20,000. Without transitional relief, your bill would double in one go. With the scheme, you might only pay a 5% increase in Year 1, followed by incremental rises in Years 2 and 3.
In some cases, properties with reduced rateable value may not benefit immediately. For example, if your value drops but transitional relief caps the decrease at 10%, you’ll still pay more than expected initially—but it balances out over time.
Once the phasing period ends (typically after 3 years), you will be charged based on your full rateable value and the appropriate multiplier. Transitional relief no longer applies, and your bill reflects the full amount.
Yes. If you’re eligible for small business rate relief, rural rate relief, or charitable relief, these can still apply alongside transitional relief. Your council will calculate which combination gives the greatest reduction.
Check your bill thoroughly. If your transitional relief seems too low or missing, contact your local council or LPS. Have your rateable value and property reference number ready to speed up the query.
Transitional relief on new business rates is designed to offer stability during a period of financial change. Whether you’re facing a sharp increase or a significant drop in rateable value, this relief ensures you’re not overwhelmed—or underserved—by a sudden change. It's a safety net that protects businesses through phased adjustments.
