Welsh Ministers have approved new rules to smooth bills after the 2026 business rates revaluation, confirming a two‑year transition before a full return in 2028–29. The Non‑Domestic Rating (Chargeable Amounts) (Wales) Regulations 2025 were made on 17 December and come into force on 31 December, according to legislation.gov.uk. For ratepayers facing higher liabilities from 1 April 2026, 67% of the increase is offset in 2026–27, 34% in 2027–28, and there is no offset in 2028–29.

Eligibility rests on continuity and occupancy. A property must appear on the local or central rating list on 31 March 2026, on every day between that date and the day in question, and on that day itself. The same person must have been the ratepayer on 31 March 2026 and remain liable on the relevant day. Properties that were empty on 31 March 2026 do not qualify, and any apportionment for part‑occupation under section 44A of the 1988 Act excludes the property from the scheme.

Two reference points drive the calculation. Base Liability (BL) is the chargeable amount for 31 March 2026, annualised across 365 days. Notional Chargeable Amount (NCA) is what the bill would be from 1 April 2026 if no transitional rules applied. If a reduction takes effect after 1 April 2026 - for example via appeal or a material change - the NCA is recalculated from the date of change, using the number of days in that financial year.

Relief only applies where the increase is material: the NCA must exceed the BL by more than £300. Where it does, the uplift is phased. In 2026–27 the bill is reduced by 67% of the difference between NCA and BL, calculated per day. In 2027–28 the reduction is 34% of that same difference, again applied daily. The calculation cannot take the chargeable amount below zero, and the second year uses 366 days to reflect the leap year.

Think of a Swansea café that paid about £12,000 in 2025–26 (a practical proxy for the BL). After revaluation, its 2026–27 NCA is £18,000, so the increase is £6,000. In 2026–27, 67% of the increase (£4,020) is offset, leaving £13,980 to pay. In 2027–28, 34% (£2,040) is offset, leaving £15,960. From 1 April 2028 the full £18,000 is due, subject to any other reliefs the business qualifies for.

Continuity matters for cashflow planning. If that café changes hands in August 2026 and the new occupier becomes liable, transitional protection stops from the change date because the scheme requires the 31 March 2026 occupier to be the same person liable on the day in question. Likewise, if the billing authority issues a part‑occupation apportionment under section 44A, the property falls outside the scheme.

What if your bill falls at the revaluation? These Regulations do not phase decreases, so any reduction passes through in full. The NCA reset mechanism also means that if a later change lowers liability during the three‑year window, the new lower figure is used from the effective date, improving the in‑year position.

The rules apply to hereditaments on the central list as well as local lists - typically network infrastructure such as utilities - but the practical steps for SMEs are the same: confirm continuity of occupation, check whether your 1 April 2026 bill is more than £300 above your 2025–26 position, and consider interactions with existing reliefs.

The 2025 Regulations revoke the 2022 transitional rules and sit alongside reform in the Local Government Finance (Wales) Act 2024. Ministers state that, so far as practicable, overall rates receipts during the period should align with what would otherwise be expected - a guardrail for local authority funding noted in the legislation.

Timings are tight for finance teams. The instrument was made on 17 December 2025 and takes effect on 31 December 2025; the transitional window runs from 1 April 2026 to 31 March 2029. Budget for step‑ups in April 2027 and April 2028, ring‑fence working capital accordingly, and speak to your billing authority early if occupancy or liability is likely to change. Source: legislation.gov.uk and Welsh Government.