The Chancellor has committed to exploring small business tax reforms to make it easier for firms to open new offices and shops.  

An interim report published by the Treasury sets out that Rachel Reeves (pictured) will look at fixing sudden jumps in business rates — known as “cliff edges” — that can discourage small business investment and growth.

Currently, when a business opens a second property, it loses access to all small business rates relief, holding businesses back from expanding.    

The Treasury says the report, called Transforming Business Rates, comes as the Chancellor “sets out her intentions to go further on legislation to cut red tape and deregulation to drive growth”. 

Reeves adds: “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 build an economy that works for, and rewards working people.” 

The Treasury says it is also considering other ways to improve support for businesses that invest in their premises, and to make the business rates system easier to navigate. 

Options being considered are changing the way that tax is calculated to minimise other cliff-edges and boost improvement relief.  

Changes will be announced at the Budget on 26 November. 

Federation of Small Businesses policy chair Tina McKenzie says: “Improving business rates is really important for small businesses, and it is a useful step to put this interim report out to encourage business-government dialogue. 

“It’s incredibly welcome that the Chancellor has recently taken the powers she needs to improve the system for small firms and the high streets while keeping within her fiscal rules.  

“Of course, the proof will be in the pudding at Budget — but we very much hope that Ministers deliver a big result for small firms.”

Confederation of British Industry chief economist Louise Hellem adds: “The CBI welcomes this interim report as a significant step forward in the long-awaited reform of the business rates system.  

“The government is right to prioritise tackling cliff-edges, which have long acted as a brake on investment and growth across the economy.  

“We particularly welcome both the commitment to explore a slice-based system and options for improving investment incentives — such as enhancing improvement relief as put forward by CBI members.”