PRESTON TAIT - 2000 TRANSITION WALES
TRANSITION

Transition can be a penalty or a subsidy depending on whether the R.V. has increased (losers) or decreased (gainers).
Actual increases or decreases in rates payments due to a change in R.V. will be geared to the previous years liability.

The original idea of transition was to spread the impact of revaluation more evenly. Those to pay less capped in order to help those who should be paying more.
WHERE TRANSITION IS NOT APPLICABLE - DEMOLITIONS ETC.

Any reduction to a rateable value with an effective date after 1st April due to a part demolition of the premises or some other alteration will have the ratio of that reduction applied to rates payments so that for example where a property had been increased in value by 10 times at the revaluation but was subject to transition ( where the actual payments were only increased by 10%) , a demolition of half of premise would lower the rates bill by a half, whereas any reduction as a result of an appeal with a 1st April effective date may have made no difference to payments. This is known as an N over J fraction.
(N being the revised value, J being the original value).


EXAMPLE

Property at 10,000 in 1999 increased to 100,000 in year 2000.
Rates payments only increased from 4,890 by 10% plus inflation to 6,454. Property then half demolished in May 2001 reducing the rateable value to 50,000. By N over J (50,000 over 100,000) the rates payments are reduced by a half with effective date 1st May 2001.


If the property had been overvalued and appealed to 50,000 as at 1st April 2000 (with no demolition having taken place) the new theoretical liability would be 50,000 at 41.6 pence or 20,800 still way above the transition limit of 6,454 with no immediate difference to payments.
TRANSITION WALES

The Welsh Assembly have come up with a different transition scheme for Wales whereby transition disappears altogether by 2003.

For properties below 25,000 any increase is limited to 10% in the year 2000/2001 thereafter the transition is reduced by two thirds for 2001/2002 and a third in 2002/2003 and nothing thereafter.

There is no payment limit on increases of value of properties with an R.V. of 25,000 or more.

Decreased payments are limited to a 15% drop in 2000/2001 extending to 30% in 2001/2002 and 45% in 2003/2004.