Government Signals Further Reform to Business Rates

Small businesses looking to expand premises could soon find it easier following new government commitments to make business rates fairer. An interim report from the Treasury says that the Chancellor will examine ways to tackle so-called ‘cliff edges’ in the system, being the sudden jumps in rates that can discourage or prohibit investment.

At the moment, if a small business opens a second property it immediately loses all entitlement to Small Business Rates Relief (SBRR). The government now says it will review how SBRR can support rather than inhibit business growth.

The report also confirms that from April 2026, permanently lower tax rates will be introduced for shops, pubs, restaurants, and other retail, hospitality, and leisure businesses with a rateable value below £500,000.

Changes to how business rates are calculated are also under review.

Business groups have been advocating for changes in the way business rates are calculated for a long time. 

They welcomed the report’s confirmation that the government will also consider moving from the current ‘slab’ model, where the whole property is taxed at the highest rate, to a ‘slice’ model, where tax gradually increases with value.

What happens next?

This is an interim report, with an update to be provided at the Autumn Budget on 26 November 2025.

If you’re looking to expand your business into new premises, business rates are not the only factor to consider, but they can be significant. If you’d like help designing or evaluating your plans for expansion, why not get in touch? We’d be happy to help!