Businesses across the UK will benefit from the cuts, which will be funded by a tax rise for the very largest business properties, such as online sales warehouses.
Until then, 250,000 retail, hospitality and leisure (RHL) properties will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system.
This support is alongside the Budget announcement to freeze the small business multiplier, together with Small Business Rates Relief protecting over a million properties from inflationary increases. Taken together, the government said this is a package worth over £1.6 billion in 2025-26.
The government this week also introduced legislation to increase the Employment Allowance from £5000 to £10,500, meaning 865,000 employers will not pay employer national insurance next year.
James Murray, Exchequer Secretary to the Treasury, said: “For too long the business rates system has been working against our high streets. Today is a major step towards our new system that will support retail, hospitality and leisure businesses on our high streets to succeed.
This Bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.”
Craig Beaumont, Federation of Small Businesses executive director, said: “We are pleased to see James Murray and the whole Treasury team take this important step forward today – legislating for the significant increase to the Employment Allowance which FSB strongly championed, to protect smaller businesses with employment costs. But also taking a decisive step forward on business rates reform.
For far too long, permanent business rates reform has been put into the too difficult box. It is extremely encouraging on rates to see ministers standing up for small firms in retail and hospitality and taking long-term action.”
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