Chancellor John Healey is considering tax cuts for small businesses in England as part of a package to revive struggling high streets, ahead of his first Budget later this year.
Treasury officials have held workshops with business groups over the past two weeks to discuss measures that could reduce business rates and encourage new businesses to open on high streets, according to The Telegraph.
One option under consideration is raising the threshold for Small Business Rate Relief, which currently provides 100 per cent relief to businesses occupying premises with a rateable value of £12,000 or less. Relief tapers away for properties valued between £12,001 and £15,000.
The £12,000 threshold has remained unchanged since the current system was introduced in 2017. Increasing it in line with inflation would take it to about £17,096, while businesses with higher rateable values could receive tapered relief up to £20,000.
A property’s rateable value is an assessment by the Valuation Office Agency of the annual rent it could command if let on the open market.
Another proposal Mr Healey is considering is to extend transitional relief, which limits how quickly business rates bills can rise following a revaluation.
The latest revaluation came into effect in April 2026 and has produced significant changes in rateable values for some businesses. Under the current transitional arrangements, bills for properties with a rateable value of up to £20,000 can rise by no more than 5 per cent in 2026-27, 10 per cent plus inflation in 2027-28 and 25 per cent plus inflation in 2028-29.
The Treasury could extend the period over which businesses move towards their full liability, allowing bills to increase more gradually.
The government has already introduced a £4.3bn package of business-rates support following the 2026 revaluation, including expanded support for smaller firms that have lost existing relief.
The measures under consideration would form part of a wider attempt to stimulate investment on England’s high streets, where the government hopes lower operating costs could encourage entrepreneurs to open or expand businesses.
Prime Minister Andy Burnham has previously said high streets should become “a symbol of Britain’s renaissance” and, before taking office, argued that Labour needed to “listen to small businesses more” to support economic growth.
For Mr Healey, the challenge will be to provide relief to smaller businesses without creating a larger structural burden for the Exchequer or shifting the tax burden elsewhere within the business-rates system.
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