Transitional Relief
A government scheme capping annual business rates bill increases following the 2026 revaluation, funded by a 3.2 billion programme.
Transitional relief is a government scheme that limits how much your business rates bill can increase (or decrease) in a single year following a revaluation. The 2026 revaluation, backed by a 3.2 billion transitional relief programme, ensures that businesses whose rateable values increased significantly do not face the full impact immediately. Instead, the increase is phased in over the life of the rating list. Conversely, businesses whose RV decreased may not see the full reduction immediately either, as the scheme works in both directions. The caps differ depending on property size, with smaller properties receiving more protection.
Key Points
- Caps annual bill increases following the 2026 revaluation
- Funded by a 3.2 billion government programme
- Cap percentages vary by property size and year
- Works in both directions: caps increases and phases in decreases
- Applied automatically by local authorities
How Transitional Relief Works
Transitional relief sets a maximum percentage by which your bill can increase or decrease each year. The exact cap percentages are set by the government and vary by property size (small vs large) and the year within the rating list. For example, a small property might be capped at a 10% annual increase, while a large property might be capped at 25%. This means that even if your rateable value doubled at revaluation, your bill would only increase by the capped percentage each year until it reaches the full amount.
Who Benefits Most
Businesses in areas where commercial rents rose sharply between valuation dates benefit most from transitional relief, as their RV increase is spread over several years. Properties in central London, thriving high streets, and areas of rapid development often see the largest revaluation increases. Conversely, businesses in areas where rents fell may find their bill decreases are also phased in gradually, which means they pay more in the short term than their new RV would suggest.
Frequently Asked Questions
Is transitional relief automatic?
Yes. Unlike most other business rates reliefs, transitional relief is applied automatically by your local authority. You do not need to apply. However, you should check your bill to confirm the correct cap has been applied.
Does transitional relief apply to all properties?
Transitional relief applies to all properties affected by the revaluation, but the cap percentages differ between small and large properties. Small properties (RV below 20,000 in England, or 12,000 in Wales) receive lower caps, meaning their bills increase more slowly.
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