Guidance
About this guidance
This guidance provides ratepayers and local authorities with information about the transitional relief available, following the non-domestic rates (NDR) revaluation on 1 April 2023. It applies to Wales only and does not replace any existing NDR legislation or any guidance on other reliefs (e.g. small business rates relief).
Billing queries about the relief should be directed to the relevant local authority. Contact details for local authorities can be found here. Enquiries about this guidance and the related legislation should be sent to the Welsh Government at the following email address: LocalTaxationPolicy@gov.wales
A range of other mandatory and discretionary NDR reliefs are also available to specific types of property or occupiers. Further information about NDR reliefs can be found on our Business Wales webpages.
Introduction
This transitional relief scheme was announced as part of the Welsh Government Draft Budget for 2023-24. It will limit increases in NDR bills, as a result of the revaluation on 1 April 2023. An eligible ratepayer will pay 33% of their additional liability in the first year (2023-24) and 66% in the second year (2024-25), before reaching their full liability in the third year (2025-26).
The transitional relief is fully funded by the Welsh Government and defined in the Non-Domestic Rating (Chargeable Amounts) (Wales) Regulations 2022. The Regulations prescribe rules to calculate the chargeable amount for properties with increased NDR liability of more than £300, as a result of the revaluation. The relief is available to ratepayers on the local list and on the central list.
The Welsh Government is providing £113m over two years to fund this transitional relief, supporting all areas of the tax-base through a consistent and straightforward scheme.
Which properties will benefit from the relief?
Eligibility for transitional relief is not limited to any sector, size, or use of the property (hereditament) within the NDR tax base.
In order to be eligible for transitional relief, the hereditament must:
- have been shown on a local list or central list on 31 March 2023 (the day before the new lists compiled on 1 April 2023 have effect);
- have an increase in liability of more than £300 (the de minimis threshold below which the administrative costs of providing this relief are deemed to outweigh the benefits);
- not be in receipt of relief for partially occupied properties (under section 44A of the Local Government Finance Act 1988 (the 1988 Act);
- not be a case to which charitable relief for unoccupied properties applies (under paragraph 2 of Schedule 4ZB the 1988 Act); and
- be occupied by the same occupier of the property as on 31 March 2023. If not, the relief ceases to apply. If the property is unoccupied on 31 March 2023, this condition is not met.
How much relief will be available?
Subject to the eligibility criteria set out above, an increase in NDR liability will be phased in over two years. Ratepayers will benefit from transitional relief of 67% of their increased liability in 2023-24 and 34% in 2024-25. In 2025-26, all ratepayers will pay their full bill, subject to any other reliefs they receive.
How will the relief be administered?
For hereditaments on the local rating list, local authorities will automatically adjust bills to apply the transitional relief, where the eligibility criteria are met.
Local authorities are responsible for providing ratepayers with clear and accessible information on the details and administration of the scheme. If, for any reason, an authority is unable to provide this relief to eligible ratepayers from 1 April 2023, consideration should be given to notifying eligible ratepayers that they qualify for the relief and that their bills will be recalculated.
Local authorities will be asked to identify the total amount of relief provided under the scheme in their NDR returns (NDR1 and NDR3).
For hereditaments on the central rating list, the Welsh Government will automatically adjust ratepayers’ bills to apply the transitional relief, where the eligibility criteria are met.
The transitional relief will phase-in increases in NDR liability over a two-year period, by providing ratepayers with relief of 67% of their increased liability in 2023-24 and 34% in 2024-25. By the start of the 2025-26, ratepayers will pay their full bill based on the 2023 revaluation.
If the hereditament meets the eligibility criteria, then the level of transitional relief applicable is determined by the steps set out below. Some worked examples are included in Annex 1.
Determine the base liability
To calculate the base liability (BL) for a hereditament, the formula below is used.
If the hereditament meets the conditions to be eligible for Small Business Rates Relief (SBRR):
A x 0.535
E
In all other cases:
A x 0.535
Where:
- A is the rateable value for a hereditament on a local list or central list as at 31 March 2023.
- 0.535 is the multiplier set for 2022-23.
- E is the amount which applies to the defined hereditament on 31 March 2023 in accordance with the Non-Domestic Rating (Small Business Relief) (Wales) Order 2017 – this determines the amount of SBRR the hereditament is eligible for.
Determine the notional chargeable amount
To calculate the notional chargeable amount (NCA) for a hereditament the formula below is used.
If the hereditament meets the conditions to be eligible for SBRR:
A x B
E
In all other cases:
A x B
Where:
- A is the rateable value for the hereditament on a local list or central list as at 1 April 2023;
- B is the non-domestic rating multiplier for the financial year beginning on 1 April 2023, to be set by the Welsh Ministers according to paragraph 4B of Schedule 7 to 1988 Act; and
- E is the amount which applies to the defined hereditament on 1 April 2023 in accordance with the Non-Domestic Rating (Small Business Relief) (Wales) Order 2017 – this determines the amount of SBRR the hereditament is eligible for.
The NCA is calculated based on the situation on 1 April 2023. This is used to determine the amount of relief which will apply in each year of the scheme. The NCA is not to be recalculated on 1 April 2024. The effect of calculating the level of relief in this way is that the ratepayer will be required to meet the costs of any increase in liability due to inflation in 2024-25, reflected in any increase in the multiplier. The relief calculated as at 1 April 2023 is deducted from the chargeable amount for the relevant day.
Compare the base liability to the notional chargeable amount
The hereditament is entitled to relief where the increase in liability is more than £300:
NCA > (BL + 300)
Where this condition is satisfied, the maximum amount to be deducted from the chargeable amount is calculated.
Determine the maximum deduction to the chargeable amount
The chargeable amount for NDR is calculated on a daily basis. The maximum daily level of transitional relief which applies for the relevant year is calculated using the formula below.
For year commencing 1 April 2023 (which overlaps with a leap year):
(NCA - BL) x 0.67
366
For year commencing 1 April 2024:
(NCA - BL) x 0.34
365
For the year commencing on or after 1 April 2025, the chargeable amount is reduced by zero through transitional relief, although other reliefs may continue to apply.
Determine the chargeable amount (liability) without transitional relief
Calculate the chargeable amount for the relevant day in accordance with section 43, 45 or 54 of the 1988 Act, as appropriate. This will take account of any mandatory reliefs for which the ratepayer is eligible, before any further deduction to the chargeable amount arising from transitional relief entitlement is applied.
Determine the chargeable amount after transitional relief
Reduce the chargeable amount without transitional relief by the maximum deduction to the chargeable amount, as calculated above.
If applying the maximum deduction to the chargeable amount would result in a negative figure, then the final chargeable amount will be zero. In this scenario, the final amount of relief applied will be lower than the calculated maximum deduction.
If the rateable value of an eligible property changes during the transitional relief period, the entitlement will be recalculated from the effective date of the change, in accordance with the steps set out above. This is the case whether a rateable value increases or decreases. Changes in rateable value can occur for a variety of reasons.
Is transitional relief applied before or after other types of relief?
The chargeable amount, prior to the application of transitional relief, is determined in accordance with the relevant section of the 1988 Act (e.g. section 43 for occupied local list hereditaments). This means that the other reliefs provided under the relevant section are applied to a ratepayer’s liability before the calculated transitional relief deduction.
Any relief provided using the discretionary powers of local authorities (e.g. under section 47 of the 1988 Act) should be applied after any transitional relief entitlement. This includes any discretionary ‘top-up’ element of a mandatory relief (e.g. any charitable relief above the mandatory 80% awarded by the local authority), as this is awarded under section 47.
The calculation for transitional relief entitlement (i.e. the maximum deduction to the chargeable amount) takes account of any entitlement to SBRR, but not any other reliefs which may apply. This is a separate step from the calculation of liability before the transitional relief deduction is applied.
If a ratepayer’s residual liability, after all other mandatory reliefs are applied, is less than their calculated maximum deduction to the chargeable amount, then the final chargeable amount will be zero.
If I cease to be the ratepayer for a property during the transitional relief period, do I still get relief for the period I was liable for NDR?
Yes. Transitional relief entitlement is calculated on a daily basis (the same as NDR liability). A ratepayer is entitled to relief for the days they occupy a property, as long as they were also the occupier on 31 March 2023.
If during the transitional relief period I become liable for NDR for a property I did not previously occupy, will I be eligible for the relief?
No. A ratepayer must have been liable for NDR in respect of the property on 31 March 2023, as well as from 1 April 2023, to be eligible for the relief.
Will transitional relief entitlement be recalculated in 2024-25, to account for any increase in liability arising from inflation of the NDR multiplier?
No. Transitional relief entitlement (i.e. the maximum deduction to the chargeable amount) is calculated for both years of the scheme on the basis of the situation on 1 April 2023. It will not be re-calculated on 1 April 2024. The pre-calculated deduction will be applied to a ratepayer’s liability in 2024-25, based on the relevant multiplier. Entitlement will only be adjusted if the rateable value of the property changes or if the eligible ratepayers ceases to occupy the property.
If the rateable value of my property changes during the transitional relief period, will my entitlement be recalculated?
Yes. If the rateable value of an eligible property changes during the transitional relief period, entitlement will be recalculated. NDR liability and transitional relief entitlement are calculated on a daily basis and will be recalculated from the effective date of the change, based on the steps set out in this guidance. This is the case whether a rateable value increases or decreases. Changes in rateable value can occur for a variety of reasons.
If my property is unoccupied, but I am still the ratepayer, how will my entitlement be affected?
If your property is occupied on 31 March 2023 and unoccupied on or after 1 April 2023, you will still be entitled to transitional relief, unless your property is in receipt of charitable relief for unoccupied properties under paragraph 2 of Schedule 4ZB to 1988 Act (unoccupied property where the next use is expected to be for charitable purposes or as a community amateur sports club). Empty properties may receive full relief from NDR for three months (or six months for industrial properties) after they become unoccupied, so the transitional relief will have no effect on liability during any such period. You would continue to benefit from transitional relief if your property remained unoccupied thereafter, or if you resumed occupation (providing that the occupier is the same as the occupier on 31 March 2023).
What can I do if I have reason to believe my relief has been calculated incorrectly?
If you have reason to believe the relief allocated to your property or your NDR bill is incorrect, you should contact your administering local authority.
What should I do if I want to understand my property’s rateable value?
The independent Valuation Office Agency (VOA) is an Executive Agency of HM Revenue and Customs and is responsible for compiling and maintaining rating lists for Wales. If you want to understand how your property’s rateable value was determined or have a query about it, you should contact the VOA.
Example 1
A hereditament’s rateable value increases from £6,000 to £9,000 and SBRR entitlement is reduced.
Determine the base liability
On 31 March 2023, the hereditament is eligible for SBRR:
(6,000 x 0.535) / 5,000,000 = £0
Determine the notional chargeable amount
On 1 April 2023, the hereditament is eligible for SBRR:
(9,000 x 0.535) / 2 = £2,408
Compare the base liability to the notional chargeable amount
Check whether the notional chargeable amount is more than £300 greater than the base liability:
2,408 – 0 = £2,408
Determine the maximum deduction to the chargeable amount
For each day in the financial year commencing 1 April 2023:
(2,408 - 0) x 0.67) / 366 = £4.41
For each day in the financial year commencing 1 April 2024:
(2,408 - 0) x 0.34) / 365 = £2.24
Determine the chargeable amount (liability) without transitional relief
As SBRR is the only other statutory relief applicable to the hereditament, the daily chargeable amount for the financial year commencing 1 April 2023 is:
(9,000 x 0.535) / (366 x 2) = £6.58
Determine the chargeable amount after transitional relief
For each day in the financial year commencing 1 April 2023, the daily chargeable amount is:
6.58 – 4.41 = £2.17
Example 2
A hereditament’s rateable value increases from £10,000 to £13,000 and SBRR entitlement is removed.
Determine the base liability
On 31 March 2023, the hereditament is eligible for SBRR:
(10,000 x 0.535) / 1.5 = £3,567
Determine the notional chargeable amount
On 1 April 2023, the hereditament is not eligible for SBRR:
13,000 x 0.535 = £6,955
Compare the base liability to the notional chargeable amount
Check whether the notional chargeable amount is more than £300 greater than the base liability:
6,955 – 3,567 = £3,388
Determine the maximum deduction to the chargeable amount
For each day in the financial year commencing 1 April 2023:
(6,955 – 3,567) x 0.67) / 366 = £6.20
For each day in the financial year commencing 1 April 2024:
(6,955 – 3,567) x 0.34) / 365 = £3.16
Determine the chargeable amount (liability) without transitional relief
As the hereditament is not eligible for any other statutory reliefs, the daily chargeable amount for the financial year commencing 1 April 2023 is:
(13,000 x 0.535) / 366 = £19.00
Determine the chargeable amount after transitional relief
For each day in the financial year commencing 1 April 2023, the daily chargeable amount is:
19.00 – 6.20 = £12.80
Example 3
A hereditament’s rateable value increases from £50,000 to £60,000.
Determine the base liability
On 31 March 2023, the hereditament is not eligible for SBRR:
50,000 x 0.535 = £26,750
Determine the notional chargeable amount
On 1 April 2023, the hereditament is not eligible for SBRR:
60,000 x 0.535 = £32,100
Compare the base liability to the notional chargeable amount
Check whether the notional chargeable amount is more than £300 greater than the base liability:
32,100 – 26,750 = £5,350
Determine the maximum deduction to the chargeable amount
For each day in the financial year commencing 1 April 2023:
(32,100 – 26,750) x 0.67) / 366 = £9.79
For each day in the financial year commencing 1 April 2024:
(32,100 – 26,750) x 0.34) / 365 = £4.98
Determine the chargeable amount (liability) without transitional relief
As the hereditament is not eligible for any other statutory reliefs, the daily chargeable amount for the financial year commencing 1 April 2023 is:
(60,000 x 0.535) / 366 = £87.70
Determine the chargeable amount after transitional relief
For each day in the financial year commencing 1 April 2023, the daily chargeable amount is:
87.70 – 9.79 = £77.91
Example 4
A hereditament’s rateable value increases from £15,000 to £16,000. The hereditament is eligible for charitable relief.
Determine the base liability
On 31 March 2023, the hereditament is not eligible for SBRR:
15,000 x 0.535 = £8,025
Determine the notional chargeable amount
On 1 April 2023, the hereditament is not eligible for SBRR:
16,000 x 0.535 = £8,560
Compare the base liability to the notional chargeable amount
Check whether the notional chargeable amount is more than £300 greater than the base liability:
8,560 – 8,025 = £535
Determine the maximum deduction to the chargeable amount
For each day in the financial year commencing 1 April 2023:
(8,560 – 8,025) x 0.67) / 366 = £0.98
For each day in the financial year commencing 1 April 2024:
(8,560 – 8,025) x 0.34) / 365 = £0.50
Determine the chargeable amount (liability) without transitional relief
As the hereditament receives 80% mandatory charitable relief, the daily chargeable amount for the financial year commencing 1 April 2023 is:
(16,000 x 0.535) / (366 x 5) = £4.68
Determine the chargeable amount after transitional relief
For each day in the financial year commencing 1 April 2023, the daily chargeable amount is:
4.68 – 0.98 = £3.70
This is the daily chargeable amount before any ‘top-up’ charitable relief (i.e. above the mandatory 80%) awarded at the discretion of the local authority is applied.
Example 5
A hereditament’s rateable value increases from £15,000 to £16,000. The hereditament is unoccupied.
Determine the base liability
On 31 March 2023, the hereditament is not eligible for SBRR:
15,000 x 0.535 = £8,025
Determine the notional chargeable amount
On 1 April 2023, the hereditament is not eligible for SBRR:
16,000 x 0.535 = £8,560
Compare the base liability to the notional chargeable amount
Check whether the notional chargeable amount is more than £300 greater than the base liability:
8,560 – 8,025 = £535
Determine the maximum deduction to the chargeable amount
For each day in the financial year commencing 1 April 2023:
(8,560 – 8,025) x 0.67) / 366 = £0.98
For each day in the financial year commencing 1 April 2024:
(8,560 – 8,025) x 0.34) / 365 = £0.50
Determine the chargeable amount (liability) without transitional relief
For each day in the financial year commencing 1 April 2023 when empty property relief applies, the daily chargeable amount is £0.
For any other day in the financial year commencing 1 April 2023, the daily chargeable amount is:
(16,000 x 0.535) / 366 = £23.39
Determine the chargeable amount after transitional relief
For each day in the financial year commencing 1 April 2023 when empty property relief applies, the daily chargeable amount is:
0 – 0.98 < £0
As the chargeable amount cannot be negative, it is set to zero.
For any other day in the financial year commencing 1 April 2023, the daily chargeable amount is:
23.39 – 0.98 = £22.41