The government has outlined its roadmap for reforming England’s business rate system, promising changes designed to boost investment whilst supporting struggling high street businesses.
Calculation methods under review
One of the changes under consideration involves moving away from the current “slab” system of calculating business rates. At present, the tax rate applies to a property’s entire rateable value in one go.
The government is examining whether adopting a “slice” approach – similar to income tax bands where higher portions face increased rates – could encourage business investment and expansion.
Small business relief gets attention
Current small business rates relief creates problematic “cliff-edges” that can penalise growth. The existing system restricts relief to single properties with rateable values of £15,000 or below, meaning businesses face sudden cost jumps when expanding beyond these thresholds.
The review will examine ways to smooth these transitions, allowing smaller businesses to grow without facing punitive rate increases that currently discourage expansion.
Investment incentives under consideration
The government is looking to enhance improvement relief, which currently provides just 12 months of reduced rates for property upgrades. Industry feedback suggests this timeframe is insufficient to encourage meaningful investment in commercial premises.
Revaluation changes ahead
With the next statutory revaluation due in April 2026, the Treasury has committed to announcing protective measures in the Autumn Budget 2025. These transitional arrangements aim to shield businesses from dramatic rate increases when property values are updated to reflect current market conditions.
Looking further ahead, the government is examining the “receipts and expenditure” methodology used for properties where rental evidence is limited.
Administrative consolidation
The merger of the Valuation Office Agency with HMRC by April 2026 presents opportunities for streamlining the system. The government suggest this consolidation will deliver administrative improvements that benefit businesses.
Timeline and implementation
The government has emphasised that transforming the business rates system represents a multi-year undertaking, with reforms being phased throughout the current parliamentary term. The Autumn Budget 2025 will provide further detail on implementation plans and confirm the transitional relief package ahead of the 2026 revaluation.
The Autumn Budget is set for 26 November – follow us for updates and expert analysis on the day.
