Local government finance circular 5/2024: non-domestic rates relief guidance

Annex E - Transitional reliefs worked examples

Example 1

RV in 2022-23 of £19,000; the property was not in receipt of any relief.

Gross bill for 2022-23 of £9,462 (£19,000 x 49.8p).

RV in 2024-25 of £22,000 (unchanged since revaluation).

Gross bill for 2024-25 of £10,956 (£22,000 x 49.8p).

The bill increase is £1,494 (£10,956 - £9,462).

The cumulative Revaluation Transitional relief cap to be applied is 87.5% (Medium property, with an RV on 1 April 2023 between £20,001 and £100,000), which is greater than the 15.8% increase in gross bill (£1,494 / £9,462 = 15.8%), and therefore does not apply in this case.

No Revaluation Transitional Relief.

Example 2

RV in 2022-23 of £20,000; the property was not in receipt of any relief.

Gross bill for 2022-23 of £9,960 (£20,000 x 49.8p).

RV in 2023-24 of £38,000 (unchanged from revaluation).

Gross bill for 2023-24 of £18,924 (£38,000 x 49.8p).

The bill increase is £8,964 (£18,924 - £9,960).

The cumulative Revaluation Transitional relief cap to be applied is 87.5% (Medium property, with an RV on 1 April 2023 between £20,001 and £100,000), which is lower than the 90.0% increase in gross bill (£8,964 / £9,960 = 90.0%), and therefore applies in this case.

Revaluation Transitional relief reduces the bill from £18,924 to £18,675 (£9,960 + £8,715; 87.5% x £9,960 = £8,715)

Example 3

RV in 2022-23 of £45,000; the property was not in receipt of any relief.

Gross bill for 2022-23 of £22,410 (£45,000 x 49.8p).

RV in 2024-25 of £78,500 (unchanged from revaluation); the property is liable to pay the intermediate property rate.

Gross bill for 2024-25 of £42,782.50 (£78,500 x 54.5p).

The bill increase is £20,372.50 (£42,782.50 - £22,410).

The cumulative Revaluation Transitional relief cap to be applied is 87.5% (Medium property, with an RV on 1 April 2023 between £20,001 and £100,000), which is lower than the 90.9% increase in gross bill (£20,372.50 / £22,410 = 90.9%), and therefore applies in this case.

Revaluation Transitional relief reduces the bill from £42,782.50 to £42,018.75 (£22,410 + £19,608.75; 87.5% x £22,410 = £19,608.75)

Example 4

RV in 2022-23 of £10,000; the property was not in receipt of any relief.

Gross bill for 2022-23 of £4,980 (£10,000 x 49.8p).

RV in 2024-25 of £20,000 (unchanged from revaluation).

Gross bill for 2024-25 of £9,960 (£20,000 x 49.8p).

The bill increase is £4,980 (£9,960 - £4,980).

The cumulative Revaluation Transitional relief cap to be applied is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000), which is lower than the 100.0% increase in gross bill (£4,980 / £4,980 = 100.0%), and therefore applies in this case.

Revaluation Transitional relief reduces the new bill from £9,960 to £7,001.88 (£4,980 + £2,021.88; 40.6% x £4,980 = £2,021.88)

Example 5

RV in 2022-23 of £10,000; the property received 100% mandatory relief other than SBBS or Mandatory Rural Rates relief[1] on the 31st March 2023.

Gross bill for 2022-23 of £4,980 (£10,000 x 49.8p). Net bill is £0.

RV in 2024-25 of £20,000 (unchanged from revaluation).

Gross bill for 2024-25 of £9,960 (£20,000 x 49.8p).

The increase in gross bill is £4,980 (£9,960 - £4,980).

The cumulative Revaluation Transitional relief cap to be applied to the gross bill is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000), which is lower than the 100.0% increase in gross bills (£4,980 / £4,980 = 100.0%), and therefore applies in this case.

Revaluation Transitional relief reduces the gross bill from £9,960 to £7,001.88 (£4,980 + £2,021.88; 40.6% x £4,980 = £2,021.88);

If the property is still eligible for the 100% mandatory relief, the new net bill is £0.

Example 6

RV in 2022-23 of £10,000; the property received 100% SBBS relief on the 31 March 2023.

Gross bill for 2022-23 of £4,980 (£10,000 x 49.8p). Net bill for 2022-23 of £0.

RV in 2024-25 of £18,000 (unchanged from revaluation); the property is eligible for 10% SBBS.

Gross bill for 2024-25 of £8,964 (£18,000 x 49.8p).

The increase in gross bill is £3,984 (£8,964 - £4,980).

The cumulative Revaluation Transitional relief cap to be applied is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000), which is lower than the 80% increase in gross bills (£3,984 / £4,980 = 80.0%), and therefore applies in this case.

Revaluation Transitional relief (TR) reduces the gross bill from £8,964 to £7,001.88 (£4,980 + £2,021.88; 40.6% x £4,980 = £2,021.88).

The new RV results SBBS relief to be reduced from 100% in 2022-23 to 10% in 2024-25 (due to the operation of the taper). The 10% SBBS relief reduces the gross bill after TR down to £6,301.69 (£7,001.88 x 90% = £6,301.69).

As the property previously received 100% SBBS on the 31 March 2023, the Small Business Transitional Relief Bill Cap is to be applied. The net bill (or deemed amount) on the 31st March 2023 was £0, and the bill cap to be applied for properties that were in receipt of SBBS is £1,200 (£0 + £1,200). This is lower than the £6,301.69 new net bill, and therefore applies in this case. The Small Business Transitional Relief Bill Cap reduces the new net bill from £6,301.69 to £1,200.

The general Transitional Relief reduces the gross bill from £8,964 to £7,001.88. The new SBBS design reduces the new net bill to £6,301.69. And, lastly, Small Business Transitional Relief Bill Cap reduces the new net bill to £1,200.

Example 7

RV in 2022-23 of £10,000; the property received 100% SBBS relief on the 31st of March 2023.

Gross bill for 2022-23 of £4,980 (£10,000 x 49.8p). Net bill for 2022-23 of £0.

RV in 2024-25 of £16,000 (unchanged from revaluation); the property is eligible for 20% SBBS relief.

Gross bill for 2024-25 of £7,968 (£16,000 x 49.8p);

The gross bill increase is £2,988 (£7,968 - £4,980).

The cumulative Transitional Relief cap to be applied is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000), which is lower than the 60.0% increase in gross bills (£2,988 / £4,980 = 60.0%), and therefore applies in this case.

Transitional relief (TR) reduces the gross bill from £7,968 to £7,001.88 (£4,980 + £2,021.88; 40.6% x £4,980 = £2,021.88).

The new RV results SBBS relief to be reduced from 100% in 2022-23 to 20% in 2024-25 (due to the operation of the taper). The 20% SBBS relief reduces the gross bill after TR from £7,001.88 to £5,601.50 (£7,001.88 x 80% = £5,601.50).

As the property previously received 100% SBBS on the 31st of March 2023, the Small Business Transitional Relief Bill Cap is to be applied. The net bill (or deemed amount) on the 31st March 2023 was £0 and the bill cap to be applied for properties that were in receipt of SBBS is £1,200 (£0 + £1,200). This is lower than the £5,601.50 new net bill, and therefore applies in this case. The Small Business Transitional Relief Bill Cap reduces the new net bill from £5,601.50 to £1,200.

The general Transitional Relief reduces the gross bill from £7,968 to £7,001.88. The new SBBS design reduces the new net bill to £5,601.50. And, lastly, the Small Business Transitional Relief Bill Cap reduces the new net bill to £1,200.

Example 8

RV in 2022-23 of £7,500; the property received 100% SBBS relief on the 31 March 2023.

Gross bill for 2022-23 of £3,735 (£7,500 x 49.8p). Net bill for 2022-23 is £0.

RV in 2024-25 of £12,500; the property is eligible for 87.5% SBBS relief.

Gross bill for 2024-25 of £6,225 (£12,500 x 49.8p);

The gross bill increase is £2,490 (£6,225 - £3,735).

The cumulative Revaluation Transitional Relief cap to be applied is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000), which is lower than the 66.7% increase in gross bills (£2,490 / £3,735 = 66.7%), and therefore applies in this case.

Revaluation Transitional relief (TR) reduces the bill from £6,225 to £5,251.41 (£3,735 + £1,516.41; 40.6% x £3,735 = £1,516.41).

The 87.5% SBBS relief reduces the gross bill from £5,251.41 to £656.43 (£5,251.41 x 12.5% = £656.43). Although, the property previously received 100% SBBS on the 31 March 2023, the Small Business Transitional Relief Bill Cap does not apply in this case. This is because the new net bill (or deemed amount) plus the £1,200 cap (£0 + £1,200) is greater than the new net bill before the cap is applied (£656.43). The new net bill remains at £656.43.

Transitional Relief reduces the gross bill from £6,225 to £5,251.41. SBBS relief reduces the net bill from £5,251.41 to £656.43. £656.43 is lower than the Small Business Transitional Relief Bill Cap (£1,200), therefore the new net bill is £656.43.

Example 9

The property is a merger of two old entries.

RV in 2022-23 of £30,000 and £40,000; total gross bill for 2022-23 of £34,860

((£30,000 x 49.8p) + (£40,000 x 49.8p)). Neither property is in receipt of a relief.

RV in 2024-25 of £240,000 (unchanged from revaluation).

Gross bill for 2024-25 of £134,160 (£240,000 x 55.9p).

The gross bill increase is £99,300 (£134,160 - £34,860).

The cumulative Revaluation Transitional Relief cap to be applied is 240.6% (Large property, with an RV on 1 April 2023 above £100,000), which is lower than the 284.9% increase in gross bills (£99,300 / £34,860 = 284.9%), and therefore applies in this case.

Revaluation Transitional relief reduces the bill from £134,160 to £83,873.16 (£34,860 + £49,013.16; 140.6% x £34,860 = £49,013.16).

Example 10

The property is a split or re-organisation, taking effect on 1 April 2023.

RV in 2024-25 of £16,000 (unchanged from 1 April 2023).

Gross bill for 2024-25 is £7,968 (£16,000 x 49.8p); the property is eligible for 20% SBBS relief for 2024-25.

In order to calculate Revaluation Transitional Relief in the case of a split property, the gross bill in 2024-25 is adjusted by a relevant factor to arrive at a ‘base liability’ (1.2 for a small property with an RV of £20,000 or less, 1.25 for a medium property with an RV between £20,001 and £100,000 or 1.4 for a property with an RV of over £100,000). In this case the factor is 1.2, so the base liability is £6,640 (£7,968 ÷ 1.2). The cumulative Revaluation Transitional Relief cap to be applied is 40.6% (Small property, with an RV on 1 April 2023 up to £20,000).

The cap is applied to the base liability (£6,640 x 1.406 = £9,335.84). As this amount is higher than the £7,968 gross bill, transitional relief does not have an effect.

A 20% SBBS relief is applied to the gross bill. This reduces the bill from £7,968 to £6,374.40 (a relief of £1,593.60 is awarded).

Example 11

The property is a new entry on the valuation roll. The property was previously exempt as it was located in a public park. The property is not eligible for a relief (other than Parks Transitional Relief), e.g. due to the ratepayer cumulative RV being over £35,000.

The RV in 2024-25 is £15,000 (unchanged from 1 April 2023).

Gross bill for 2024-25 is £7,470 (£15,000 x 49.8p).

In order to calculate Parks Transitional Relief in the case of a new property, a relief of 33% is applied to the gross bill in 2024-25. In this case, the Parks Transitional Relief reduces the new bill from £7,470 to £5,004.90 (a relief of £2,465.10 is awarded).

Example 12

A property similar to that in example 7 receives Revaluation Transitional Relief from 1st of April 2023. An extension to the property is made with effect from 1st September 2024.

RV in 2022-23 of £10,000; the property received 100% SBBS relief on the 31 March 2023.

RV in 2024-25 on the 1 April is £16,000; the property is eligible for 20% SBBS relief.

After an extension/improvement, the RV of the property in 2024-25 on the 1 September is £24,000; the property is not eligible for SBBS relief.

Net Bill from 1 April to 31 August 2024

See example 7 for detail

The general Transitional Relief reduces the gross bill from £7,968 to £7,001.88. The new SBBS design reduces the new net bill to £5,601.50. And, lastly, the Small Business Transitional Relief Bill Cap reduces the new net bill to £1,200. This is apportioned for the 153 days between 1 April and 31 August, with the resulting net bill £1200 * (153/365) = £503.01.

Net Bill from 1 September 2024 to 31 March 2025

From 1 September 2024, the RV of the property increases from £16,000 to £24,000.

The cumulative Revaluation Transitional Relief cap to be applied remains 40.6% (Small property, with an RV on 1 April 2023 up to £20,000) because the relevant RV for the calculation is the RV on 1 April 2023. This is lower than the 60.0% increase in the annual gross bill on the 1st of April (£2,988 / £4,980 = 60.0%), and therefore applies in this case.

Transitional relief (TR) reduces the annual gross bill from £7,968 to £7,001.88 (£4,980 + £2,021.88; 40.6% x £4,980 = £2,021.88). Added to this, is the Gross Bill resulting from the additional RV from 1 September (£8,000*0.498 = £3,984). Therefore the total annual Gross Bill from 1 September 2024 is £10,985.88.

No SBBS relief is awarded from 1 September 2024, because RV is over £20,000. The additional RV of £8,000 is an eligible increase for 100% Business Growth Accelerator (BGA) relief. The annual amount of BGA relief (A) is therefore £8,000*0.498 = £3,984 and applies from 1 September 2024. The new net bill is therefore £7,001.88.

As the property previously received 100% SBBS on the 31 March 2023, the Small Business Transitional Relief Bill Cap is still to be applied. The net bill (or deemed amount) on the 31 March 2023 was £0 and the bill cap to be applied for properties that were in receipt of SBBS is £1,200 (£0 + £1,200). This is lower than the £7,001.88 new net bill, and therefore applies in this case. The Small Business Transitional Relief Bill Cap reduces the new net bill from £7,001.88 to £1,200.

The formula for the net bill for the period from 1 September is given by the following:

Where DA is the ‘deemed amount’. This is the net bill of the property in 2022-23 In which in this case is £0 as the property previously received full relief, £1,200 is added to this figure to reflect the small business transitional relief cap.[2] 

CRV is the current RV (on 1 September 2024) of £24,000

RV is the RV on the 1 April 2023 of £16,000

PF is the relevant poundage rate (the Basic Property Rate of 0.498 applies in this case)

A is the value of BGA relief calculated above (£3,984)

Z is another relief the property is eligible for on the £8,000 increase in RV excluding BGA. In this case, no relief is awarded because BGA is awarded at 100%.

The net bill for each day is calculated by the formula:

DA+1,200+CRV-RV*PF-A*(100%-Z)365

Given the above figures, the net bill for each day between 1 September 2024 and 31 March 2025 is:

0+1,200+24,000-16,000*0.498-3,984*(100%-0%)365=1,200365

There are 212 days in this period, therefore the total net bill between 1 September 2024 and 31 March 2025 is:

1,200365*212=£696.99

This is added to the figure calculated above for the period between 1 April 2024 and 31 August 2024 of £503.01, for a total of £503.01 + £696.99 = £1,200.

Please note that these are illustrative examples only. The administration of non-domestic rates reliefs is a matter for local authorities, and this will include the order in which they apply different reliefs which may affect the calculations in this or similar scenarios.