The Non-Domestic Rating (Transitional Protection Payments) Regulations 2013

Explanatory Note

(This note is not part of the Regulations)

The Local Government Finance Act 1988 (“the Act”) provides for non-domestic hereditaments to be re-valued periodically. On a revaluation new non-domestic rating lists are compiled. The last compilation date was 1st April 2010.

Regulations made under section 57A of the Act set out the rules for a transitional relief scheme to protect ratepayers from large increases in their rates bills following revaluation. The scheme operates to assist ratepayers whose bills would have increased above a certain amount by phasing in these increases gradually over up to five years. It is also phases in the reduction in bills of some ratepayers who would otherwise have seen their rates bills decrease immediately. The phasing in of the reductions funds the phasing in of the increases.

The effect of transitional arrangements is that in any given year a billing authority may collect more or less non-domestic rates than it would otherwise have. If no adjustment is made for such amounts, then under the rates retention scheme put in place by the Act, non-domestic rating income would vary for reasons unrelated to underlying changes in business rates income.

These regulations make provision for adjusting payments to billing authorities where there income is less as a result of the operation of the transitional arrangements; and for payments by authorities where their income is greater.

Regulation 2 provides for the calculation of the authority's deemed rating income. This is essentially the income the authority would have received had transitional arrangements not been in place. Regulation 3 provides for the calculation of the authority's actual rating income – the amount it has received net of transitional protection. Other relief and discounts are ignored for the purposes of calculating the transitional protection payment (see regulations 2(2) and 3(2)).

Regulation 4 and 5 provided that payments on account of the transitional protection payment are to be made in the course of the year to which they relate on the basis of estimated figures. At the end of the year a reconciliation payment will required if the estimated figure differ from final amounts that are certified (regulations 6 and 7).