Government’s Business Rates Overhaul: What It Means for Commercial Property Owners

The Chancellor, Rachel Reeves, has today unveiled the government’s latest priorities for overhauling the business rates system, describing reform as essential to “unsticking” the economy and supporting small business growth.

Key priorities announced

• Cliff edges under review: The government is set to address the sudden jumps in rates that occur when a small business expands into a second premises and loses all Small Business Rates Relief (SBRR). These “cliff edges” have long discouraged growth.
• Slab to slice reform: Ministers will explore replacing the current single multiplier with a banded system where successive value bands are taxed at different rates, potentially easing the load on smaller occupiers.
• Strengthening SBRR and Improvement Relief: The consultation will consider how reliefs can be restructured to support businesses investing in their premises.
• Receipts & Expenditure methodology: Concerns raised by stakeholders over valuation methods will be considered ahead of the 2029 revaluation.
• Revaluations: The current three-year cycle will remain, though shortening the antecedent valuation date is being considered for the future.
• Administrative streamlining: The merger of the Valuation Office Agency with HMRC is expected to create efficiencies for ratepayers.
• Transitional relief: A new package will be in place for the 2026 revaluation to support businesses facing sharp rises.

Industry response

While the Treasury says it is listening, many industry bodies remain sceptical. The British Property Federation called the proposals “more tinkering than transformation,” warning that Empty Property Relief must also be reformed to support development viability.

Advisers at Newmark echoed the sentiment, arguing that without a fundamental reset of the tax multiplier, businesses will still be reluctant to invest. Others, including UKHospitality and the Co-op, welcomed the focus on removing barriers to expansion and providing fairer reliefs for small businesses.

What this means for you

For property owners and occupiers, the immediate takeaway is that reliefs may be smoothed and transitional support will be available for the 2026 revaluation. However, there will be no shift to more frequent revaluations and no immediate reduction in the overall tax burden.

In other words: the system may become a little fairer, but it won’t feel lighter. Businesses should still plan for a significant liability at the next revaluation.

Our view

Business rates remain one of the heaviest costs faced by commercial occupiers. Smoothing cliff edges is welcome, but unless the government confronts the multiplier head-on and rebalances the tax burden between bricks-and-mortar and online-only businesses, growth will continue to be held back.

The Chancellor is right - growth must be the mission. But genuine growth will only come when business rates reform is more than a tidy-up exercise.