The chancellor prioritised delivering permanently lower business rates from 2026-27 in the Budget by lowering multipliers for retail, hospitality and leisure (RHL) properties.

More immediately, Rachel Reeves said the Government would provide £1.9bn of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.

The Treasury has also today launched a ‘conversation' on the longer term ambition for business rates, and said it is committed to delivering a ‘fairer business rates system that supports investment and is fit for the 21st century'.

Inviting views on priority areas for further reform, the Government said it was interested in hearing about include, but are not limited to the efficacy of improvement Relief [introduced in April and provides 12 months of relief for qualifying improvements to a property], the relative importance of business rates and other tax factors such as capital allowances, and the impact of losing Small Business Rates Relief on expansion to a second property.

The Government also invited views on the presence of ‘cliff-edges in the system which may act as a disincentive to expand', and the efficacy of Empty Property Relief in supporting landlords to make improvements to their property.

The Treasury also said it was committed to making further progress to tackle business rates avoidance and will publish a consultation on adopting a ‘General Anti Avoidance Rule' for business rates in England.

Responding to the business rates announcement, Melanie Leech, Chief Executive, British Property Federation, said: ‘With no concessions on the overall business rates burden today's announcements on this are just robbing Peter to pay Paul.

‘However, the chancellor has at least recognised the business rates system is broken and has signposted the direction towards a reformed system.'

Chief executive of think tank Localis Jonathan Werran added: ‘Is this a Budget for high streets? Our town and city centres openly display the strength of the links between economic and social prosperity in our localities.

‘The promise of permanently lower business rates from 2026/27, and more immediately from next year 40% relief as support for the retail, leisure and hospitality sectors is one step in the right direction for securing the foundational local economy, as is support against the scourge of shoplifting and anti-social behaviour.'