Business Rates Transitional Relief Explained
Why Transitional Relief Exists
When a new rating list comes into force (most recently the 2023 Revaluation), properties can experience significant increases or decreases in their rateable values.
To prevent sudden shocks to ratepayers and local authority revenues, the government applies Transitional Relief (TR), a mechanism that phases in changes to liabilities gradually over several years.
How Transitional Phasing Works
Transitional Relief operates by placing annual caps on how much your bill can increase or decrease each year following revaluation. These caps differ depending on:
The property’s rateable value band (small, medium, large); and
Whether your rates are rising (an “upward transition”) or falling (a “downward transition”).
For example, under the 2023 Revaluation scheme, a large property with a substantial increase in rateable value may have its liability capped at around +15% in year one, +30% in year two, and so on, until the full liability is reached. Conversely, a property whose rateable value fell sharply may not see the full benefit immediately, as reductions are also phased in gradually.
Common Misunderstandings
A frequent misconception is that transitional relief reduces your bill. In reality, it merely defers the impact, smoothing increases or decreases over time. Another common issue arises when occupiers move, merge, or make property changes: transitional protection doesn’t always transfer automatically, which can lead to unexpected spikes in liability.
This is particularly relevant when businesses restructure, sublet, or take on additional space during a revaluation cycle, an area where careful forecasting is key.
Forecasting Future Liabilities
Understanding your transitional position allows you to plan cash flow with greater accuracy.
At Westlock Partners, our advisers model your transitional progression across the entire revaluation cycle, accounting for:
Anticipated rateable value shifts;
Planned expansions, mergers, or disposals; and
Legislative reforms affecting multiplier caps or small business relief thresholds.
This forward-looking analysis provides clarity on both budget exposure and savings potential, critical for informed property and financial planning.