Earlier in November, the Government signalled a further push to reform business rates, aiming to tackle several long-standing issues that impact small firms and the broader property sector.
Central to the current debate are proposals included in the Treasury’s interim report, which we covered in detail recently, that outlined measures to make business rates fairer for growing enterprises, especially those expanding premises or opening new sites.
Government Announcements
- The Chancellor and Treasury are actively examining the “cliff edge” effect: currently, small businesses immediately lose all Small Business Rates Relief (SBRR) when they open additional premises. Reforming SBRR rules is firmly on the table, with the goal of supporting incremental growth rather than penalising expansion.
- Starting April 2026, permanently lower tax rates will be introduced for retail, hospitality, and leisure properties with a rateable value under £500,000 – a move expected to benefit many local shops and venues.
- A potential shift from the traditional “slab” tax system to a “slice” system is under consideration, which would allow tax rates to increase more gradually as property values rise, rather than all at once.
Business rates reform has drawn strong responses from sector groups and lobbying organisations with the key lobby groups continuing to grab the headlines:
- The British Retail Consortium (BRC) and Heart of London Business Alliance (HOLBA) continue to push for wider reliefs and more comprehensive changes, including calls for online sales taxes to address digital-versus-high-street inequalities.
- ICAEW (Institute of Chartered Accountants in England and Wales) argues reforms must go further than current proposals, emphasizing the need to remove cliff edges, improve transparency from the Valuation Office Agency (VOA), and ensure local authorities gain more discretion to provide area-specific reliefs.
- Tax specialists Ryan have been quoted extensively in the media, including PA Media and in Landlord Zone, and are warning that next year’s combination of inflation-linked increases and new supplementary multipliers could result in a “double hit” for larger properties, with the overall rates bill potentially surging by £2.5 billion nationwide.
Next steps:
The Government’s interim report promises further updates in the Autumn Budget this week but stakeholder consultations continue. Lobbying organisations will keep up the pressure by continually engaging with the media and submitting new studies and recommendations focused on rebalancing multipliers and expanding relief options. This issue is far from settled.