A recently released report from HM Treasury has confirmed that the Chancellor Rachel Reeves is reviewing the Small Business Rates Relief (SBRR), as she attempts to kick-start the economy and give businesses a platform to expand and grow.
She has reaffirmed her commitment to helping small businesses and will also look at business rates in a bid to tackle so-called “cliff edges”, which are sudden tax increases for small businesses that want to expand.
While we don’t know the full extent of the Chancellor’s exact plans at this stage, this is a very good time for business owners to understand their own financial position and look at their expansion plans to see how viable it is.
Why is the Government reviewing the Small Business Rates Relief and cliff edges?
The Government wants to make business rates fairer and encourage small business owners to increase their investments to boost economic growth.
Currently, small business owners lose all access to the SBRR if they open a second property.
This will make some business owners reluctant to invest in new commercial property because of the tax implications and increase in “cliff edges”.
This reluctance means economic growth stagnates, but the Chancellor is assessing how changing the SBBR and business rates can incentivise business owners to invest and help grow the economy.
What has the Chancellor said about the report?
After the Treasury released the business rates interim report, Chancellor Rachel Reeves said: “Our economy isn’t broken, but it does feel stuck.
“That’s why growth is our number one mission. We want to see thriving high streets and small businesses investing in their future, not held back by outdated rules or strangled by red tape.
“Tax reforms such as tackling cliff-edges in business rates and making reliefs fairer are vital to driving growth.
“We want to help small businesses expand to new premises and building an economy that works for, and rewards working people.”
We saw the Chancellor confirm during the 2024 Autumn Budget that there will be permanently lower tax rates for retail, hospitality and leisure properties including shops, pubs and restaurants from April 2026.
The Chancellor is determined to drive economic growth and what she announces will reflect that ambition while also sticking to her own tight fiscal rules and balancing the Government’s books.
What does this commitment mean for small businesses?
Having already given 250,000 retail, hospitality and leisure businesses 40 per cent off their business rates and frozen the small business multiplier to protect against inflation, the Chancellor reaffirming her commitment to change is a good sign for business owners.
She wants to drive growth and ultimately wants small business owners to play a major role in boosting the economy.
Analysing the SBRR and tackling “cliff-edge” business rates is a positive step in encouraging businesses. It will help you analyse your own business plans and decide if you are ready to expand.
As noted above, this is a great time to analyse your business’s finances ahead of the Autumn Budget. It can help you build a clear picture of your business’s current financial position and spot growth potential.
This is where finance experts can come in and help you assess the current economic climate, plan for the Autumn Budget and assess the viability of your expansion plans by analysing your finances.
Preparation is key and with the Government determined to support small businesses, assessing your finances will give you the tools to take your business to new heights.
Get in touch with our team for expert financial advice to support your business.
