HM Treasury has published a report setting out that the Chancellor will explore fixing sudden jumps in business rates known as “cliff edges” that can discourage small business investment and growth.
Currently when a business opens a second property, they lose access to all Small Business Rates Relief (SBRR), holding businesses back from expanding.
This week the Chancellor issued a letter to cabinet ministers stressing the importance of government taking action to reduce inflation and reduce the cost of living.
As announced at Autumn Budget 2024, from April 2026, there will be permanently lower tax rates for retail, hospitality and leisure properties including shops, pubs, and restaurants. Full details will be announced at the Budget on 26 November 2025.
In the meantime, the government is already helping small businesses by:
- Giving 250,000 retail, hospitality and leisure businesses, including shops, pubs and restaurants, 40% off their business rates.
- Freezing the small business multiplier to protect against inflation.
The government will also consider other ways to improve support for businesses that invest in their premises, and to make the business rates system easier to engage with, especially following the merger of the Valuation Office Agency with HMRC.
UKHospitality has said these proposals are ‘positive’ and will help to rebalance the system, but reinforced the critical need for the Government to apply the maximum possible discount to the multiplier for all hospitality properties under £500,000 rateable value.
Legislation that passed this year, which UKHospitality was instrumental in securing, gives the Government the power to apply a discount to the multiplier of up to 20p in the pound.
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, following many years of campaigning from UKHospitality.
“With hospitality businesses finding themselves taxed out as a result of cost increase after cost increase, lowering business rates, fixing NICs and cutting VAT is the action we need to see the Government take at the Budget.”