England sets transitional business rates caps 2026–29

From 1 April 2026, England will phase in changes to business rates bills over three years. This transitional relief is there to cushion sharp jumps from the 2026 revaluation, and billing authorities will apply it automatically to eligible properties. It runs until 31 March 2029. (gov.uk)

Here are the headline caps on annual bill increases if your bill goes up because of the revaluation. For smaller properties up to £20,000 rateable value (RV), or £28,000 in London, the cap is 5% in 2026–27, 10% plus inflation in 2027–28, and 25% plus inflation in 2028–29. For RVs between £20,001 (£28,001 in London) and £100,000, the caps are 15%, then 25% plus inflation, then 40% plus inflation. For RVs over £100,000, the caps are 30%, then 25% plus inflation in both 2027–28 and 2028–29. Caps apply before other reliefs and local supplements are considered. (gov.uk)

When you see “plus inflation” in those caps, think “plus whatever happens to the small business multiplier.” In the regulations that factor is called Q. Q is 1.0 in 2026–27 and then reflects the year‑to‑year change in the small business multiplier after that. So a 25% cap with a 2% rise in the small business multiplier becomes roughly a 27% cap for that year. (gov.uk)

There’s also a one‑year 1p supplement. If you are not in transitional relief (or the Supporting Small Business scheme) in 2026–27, a 0.01 addition (RS) is put on your applicable multiplier for that year only. As a teaching example: with an RV of £30,000, that supplement adds about £300 to the gross bill before any other reliefs. (local.gov.uk)

If you’ve improved your premises, improvement relief can reduce the value used in the transitional calculation. In the formulas, “A” is either the listed rateable value or, where improvement relief applies, the rateable value minus the certified improvement amount “G”. That way, the transitional cap is based on the value excluding eligible improvements. (gov.uk)

Properties do change shape. If your unit splits or merges after 1 April 2026, the scheme carries across using a “creation day” and Valuation Officer certificates so the cap is applied fairly to the new assessment. The legal instrument creating the scheme sets out that process and the role of those certificates. (statutoryinstruments.parliament.uk)

Special cases matter. In the City of London and areas with separate premiums or Business Rates Supplements, those extra charges sit outside transitional relief and are paid in full (other reliefs may still apply). That separation is spelled out in government guidance to councils. (gov.uk)

Supporting Small Business Relief (SSBR) runs alongside the scheme. From April 2026, if you lose Small Business Rate Relief, Rural Rate Relief or Retail, Hospitality and Leisure relief at revaluation, your increase is capped at the higher of £800 per year or the relevant transitional cap. Councils add SSBR automatically for those who qualify. (doncaster.gov.uk)

Worked example 1 (small shop outside London). Let’s say your 2025–26 bill was £8,000 and your 2026 revaluation pushes it higher. In 2026–27 your maximum increase is 5%, so the bill would be capped around £8,400 before other reliefs. In 2027–28 the cap is 10% plus the change in the small business multiplier; in 2028–29 it’s 25% plus that multiplier change. Your council applies the maths; this is simply to help you estimate. (gov.uk)

Worked example 2 (medium‑sized workspace in London). Suppose the 2025–26 bill was £30,000 and your RV puts you in the £28,001–£100,000 band. In 2026–27 your bill can rise by up to 15% (to £34,500). In 2027–28 the cap becomes 25% plus any change in the small business multiplier; in 2028–29 it’s 40% plus that multiplier change. This is before other reliefs like charitable or small business relief are applied. (gov.uk)

Worked example 3 (large factory outside London). With a previous bill of £200,000 and RV above £100,000, the cap is 30% in 2026–27 (so up to £260,000), then 25% plus any change in the small business multiplier in both 2027–28 and 2028–29. Remember: these caps phase in rises only; councils still apply any other eligible reliefs afterwards. (gov.uk)

Key terms you’ll see on bills and in guidance. Rateable value (RV) is the rental value snapshot used to calculate bills; for the 2026 lists it’s based on market rents at 1 April 2024. A hereditament is a rateable unit (a shop, floor or site). The multiplier is the pence‑in‑the‑pound tax rate. Transitional certificate is the Valuation Office document used if a certified value is needed for the cap. If you disagree with a certificate, you start by appealing to the VOA; the Valuation Tribunal then hears appeals. (gov.uk)

Scope note. These rules apply in England. Wales is running its own transitional approach for 2026–27 and 2027–28, so if your property is there, check Welsh Government updates rather than English caps. (gov.wales)