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If you have received a bill for 2017/2018 which is for a higher amount than you were expecting, this could be due to a transitional adjustment. You can find information and examples of how it is calculated on our transitional adjustment page.

Transitional adjustment is applied where the notional charge falls outside of the limited amount allowed for increases and decreases in the actual charge.

This transitional adjustment is applied before any relief.

This means that if your business rates has had a significant decrease you will not pay the full reduced charge straight away, it will be phased in over a period of up to five years.

The figures you need before you start are :-

  • Rateable value of the property at 31 March 2017
  • Rateable value of the property at 1 April 2017
  • Small business rates multiplier for 2016/17
  • Small business rates multiplier for 2017/18    

Notional charge for 2016/17 and 2017/18 

2016/17

The notional charge for 2016/17 is called the base liability. This is calculated by multiplying the rateable value at 31 March 2017 by the small business rate multiplier for 2016/17 before any reductions are taken off.

2017/18

This is calculated by multiplying the rateable value at 1 April 2017 by the small business rate multiplier for 2017/18, before any reductions are taken off.

More information on how business rates are calculated

Appropriate fraction

The appropriate fraction is the percentage appropriate to a small, medium or large property for either an increase or decrease in charge with 2% added for inflation.

For example the appropriate fraction for a small property with an increased charge is:

Small property percentage increase       5% = 1.05
Added inflation figure                              2% = 1.02 x
Appropriate fraction                                        1.071 
 
Medium property percentage decrease   10% =  0.90
Added inflation figure                               2% =   1.02 x
Appropriate fraction                                           0.918

Transitional limited amount

This is the amount of the base liability multiplied by the appropriate fraction.

Transitional adjustment

The amount of transition awarded.

Calculation

To calculate the transitional adjustment you need to multiply the base liability by the appropriate fraction. This give the limited amount.

The limited amount is then compared to the notional charge to work out your transitional adjustment.

Example of transitional adjustment on a reduced bill

Rateable value of the property for 2016/17                     £21,750 
Rateable value of the property for 2017/18                     £14,500
Small business rates multiplier for 2016/17                     48.4
Small business rates multiplier for 2017/18                     46.6
Base liability for 2016/17                                               £21,750 x 48.4 = £10,527.00
The appropriate fraction                                                 -20% and 2% for inflation = 0.80 x 1.02 = 0.816
Notional charge for 2017/18                                           £14,500 x 46.6 = £6,757.00
Limited amount                                                             £10,527.00 x 0.816 =  £8,590.03

Calculation for transitional adjustments

Limited amount                                                             £8,590.03
Notional charge                                                             £6,757.00

Amount of transitional adjustment added to the bill          £1,833.03 CR

Example of transitional adjustment on an increase bill

Rateable value of the property for 2016/17                      £2,550 
Rateable value of the property for 2017/18                      £2,950
Small business rates multiplier for 2016/17                      48.4
Small business rates multiplier for 2017/18                      46.6
Base liability for 2016/17                                                £2,550 x 48.4 = £1,234.20
The appropriate fraction                                                  5% and 2% for inflation = 1.05 x 1.02 = 1.071
Notional charge for 2017/18                                            £2,950 x 46.6 = £1,374.70
Limited amount                                                              £1,234.20 x 1.071 = £1,321.83

Calculation for transitional adjustments

Limited amount                                                              £1,321.83
Notional charge                                                              £1,374.70

Amount of transitional adjustment taken off the bill           £52.87