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Transitional Arrangements

The conversion from General Rates to National Non-Domestic Rates in 1990 coupled with the effects of the revaluation that year meant that many ratepayers faced large increases in their bills and others faced substantial decreases. The Transitional Relief Scheme was introduced by the Government to soften the impact of these changes by limiting the amount that individual rate bills may increase or decrease year on year, after allowing for inflation. New similar relief schemes were brought in with effect from 1st April 1995 and 1st April 2000 to phase in the effects of the subsequent revaluations gradually. The 2005 revaluation is accompanied by a new transitional scheme. View further details of the 2005 Transitional Scheme.

The mechanics of the 2000 transitional arrangements only are explained in the following paragraphs. If you require information on the subject of the 1990 and 1995 schemes, please contact the Council's Business Rates Team on (01276) 707136 or email revenues@surreyheath.gov.uk.

To determine whether the limit on rate increases or reductions should apply to a particular property, a comparison is made between the notional charge for 2000/2001, i.e. the 2000 Rateable Value multiplied by the 2000/2001Multiplier (£0.416), and the 'base bill'. If the notional chargeable amount is higher or lower than the base bill by more than a prescribed percentage then the increase or decrease is limited. The limited amount is calculated by applying the prescribed percentage to the base bill and then applying an inflation factor. The limited amount then becomes the base bill for determining whether transition applies the following year.

For the purposes of calculating the 2000/2001 rates payable, where the property was not subject to transition on 31st March 2000, the base bill is found by multiplying the Rateable Value of the property on 31st March 2000 by the rate multiplier for 1999/2000. For properties with a Rateable Value of £10,000 or more on 31st March 2000, the rate multiplier is £0.489. For properties with a Rateable Value of less than £10,000, the rate multiplier is £0.48. Where a property is still subject to transition under the 1995 scheme on 31st March 2000, the base bill is found by multiplying the transitional rate bill for 31st March 2000 by the number of days in the 1999/2000 rate year, i.e. 366 days.

The inflation factor is calculated as a ratio of the Retail Prices Indices (RPI) for September for the two years preceding the year for which the bill is being determined. The inflation factors are set out below:

Inflation Factors

To determine if a property will be subject to transition for 2000/2001

First calculate the Notional Chargeable Amount and compare this with the base bill. If the Notional Chargeable Amount exceeds or is less than the base liability, then apply the relevant Percentage Limit and Inflation Factor to the base bill.

Example 1

Rateable Value as at 1st April 2000 = £35,000
Base Bill = £9,925.63

First calculate the Notional Chargeable Amount:

Rateable Value for 01/04/00 £35,000 x 2000/2001 Multiplier £0.416 =£14,560.00

Compare the Notional Chargeable Amount (£14,560.00) with the Base Bill (£9,925.63). The Notional Chargeable Amount exceeds the Base Bill so proceed as follows:

Base Bill £9,925.63 x Percentage Increase Limit 112.5 over 100 x Inflation Factor 1.011 =



Rates Bill £11,289.16

For 2000/2001, the ratepayer will pay £11,289.16 and not £14,560.00. The difference between the two (£3,270.84) will be the amount of Transitional Relief awarded. The £11,289.16 will become the base bill for calculating the 2001/2002 years charge.

In this example, while the Notional Chargeable Amount exceeds the Base Bill x Percentage Increase Limit x Inflation Factor, the property will remain in transition.

Example 2

Rateable Value as at 1st April 2000 = £39,000
Base Bill = £16,427.63

Calculate the Notional Chargeable Amount as follows:

Rateable Value for 01/04/00 £39,000 x 2000/2001 Multiplier £0.416 =£16,224.00

Compare the Notional Chargeable Amount (£16,224.00) with the Base Bill (£16,427.63). The Notional Chargeable Amount is less than the Base Bill so proceed as follows:

Base Bill £16,427.63 x Percentage Decrease Limit 97.5 over 100 x Inflation Factor 1.011 =

£16,193.13

£16,193.12

In this case, the Notional Chargeable Amount (£16,224.00) is not lower than the amount found by multiplying the Base Bill by the Percentage Decrease Limit and Inflation Factor (£16,193.13) so this particular property would not be subject to transition. The ratepayer would therefore pay the £16,224.00.

Example 3

Rateable Value as at 1st April 2000 = £7,500
Base Bill = £5,250.00

Calculate the Notional Chargeable Amount as follows:

Rateable Value for 01/04/00 £7,500 x 2000/2001 Multiplier £0.416 =£3,120.00

Compare the Notional Chargeable Amount (£3,120.00) with the Base Bill (£5,250.00). The Notional Chargeable Amount is less than the Base Bill so proceed as follows:


Base Bill £5,250.00 x Percentage Decrease Limit 95 over 100 x Inflation Factor 1.011 =

Rates Bill£5,042.36

For 2000/2001, the ratepayer will pay £5,042.36 and not £3,120.00. The difference between the two (£1,922.36) will be the amount of Transitional Surcharge addedto the bill. The £5,042.36 will become the base bill for calculating the 2001/2002 years charge.

In this example, while the Notional Chargeable Amount is lower than the Base Bill x Percentage Decrease Limit x Inflation Factor, the property will remain in transition.

If the Rateable Value for 1st April 2000 were altered for any reason, the transition would have to be recalculated, similarly if the base bill was changed because of an alteration to the Rateable Value. There are different rules for changes in Rateable Value after the 1st April 2000 and,

The scheme applies only to the bill based on a property at the time of the revaluation. If there are any changes to the property after the revaluation date, transitional arrangements will not normally apply to the part of a bill that applies to any increase in Rateable Value due to those changes.

The prescribed percentage limits on increases and decreases are shown below:

Prescribed Percentage Increase Limits

Prescribed Percentage Decrease Limits