Chancellor commits to reform of Small Business Rates Relief

A new report published by the Treasury has set out that the Chancellor will reform business rates in her upcoming Budget to fix “cliff edges” faced by small businesses as they grow.

Currently when a business opens a second property, they lose access to all Small Business Rates Relief (SBRR), which discourages investment and growth. The report confirms that the government will review how SBRR can support business growth, potentially lifting growth and living standards in the future for those who work in these small businesses.  

Chancellor of the Exchequer, Rachel Reeves, said:

“Tax reforms such as tackling cliff-edges in business rates and making reliefs fairer are vital to driving growth. We want to help small businesses expand to new premises and building an economy that works for, and rewards working people.“

As announced in the Autumn Budget last year, retail, hospitality and leisure properties will also benefit from permanently lower business rates from April 2026, with full details to be announced in November’s Budget.

The government will also consider other ways to improve support for businesses that invest in their premises, and to make it easier to engage with the business rates system. Options being considered are changing the way the tax is calculated to minimise cliff-edges and enhancing Improvement Relief.

Business groups have welcomed the changes, saying they will help small firms invest, create jobs, and grow.  

Kate Nicholls, Chair of UKHospitality, said:

“For too long, the broken business rates system has unfairly punished hospitality businesses and I’m pleased that the government is taking action to reform it.

“These measures to remove punitive cliff-edges and barriers to investment are positive and will help to rebalance the system, as will the government’s commitment to lower business rates bills for hospitality businesses.“