Are the 2025 Business Rate Cuts Boosting Growth?

The latest round of business rates cuts throughout 2025 has been one of the most widely discussed fiscal decisions of the year. It’s been seen as a measure of relief following years of higher costs and rising inflation.

The big question is whether these changes are genuinely fuelling business growth, or if the benefits are really more modest than expected. To answer that, we’ve got to look closely at what has actually changed and how the savings are being felt, and where other forms of business finance are stepping in to help.

The Impact of 2025 Business Rate Cuts

In April 2025, the government introduced a new round of business rate reductions. This followed earlier reforms in 2023 and 2024, but the 2025 package has gone a step further in easing the tax burden on commercial properties. Smaller companies occupying retail, hospitality, and light industrial premises have seen some of the biggest benefits, with up to 40% off business rates up to a maximum of £110,000 per business.

Of course, we can expect savings to vary, but for many, the drop will mean thousands of pounds a year that don’t need to be sunk into tax bills. That means a bit of breathing space at a time when costs in other areas, such as energy and raw materials, remain volatile.

How Are Businesses Using the Savings?

One of the most important questions is how organisations have been choosing to reinvest following the relief. Some are directing funds towards everyday operating costs, and others are using the additional cash to support longer-term plans. It might be in expanding properties, funding more up-to-date equipment, or new staff; the British Property Federation has indicated that reductions in business rates could yield up to 1,300 new jobs.

The Wider Economic Picture

We’ve got to recognise that business rates are just one facet of the situation. Growth is impacted by a whole range of factors, including interest rates, access to business finance, consumer confidence, and the febrile global supply chain situation.

The 2025 business rate cuts have given some companies a handy short-term lift, but growth on a larger scale depends on how these savings are combined with broader investment strategies. A company saving £10,000 on rates may decide to use that as a deposit for new machinery funded through asset finance. This creates a multiplier effect, as the tax savings can unlock external funding, which in turn drives greater efficiency and output.

Regional Variations in Benefits

Not every area of the UK has seen the same level of relief. Urban centres with high commercial property values, like London and Manchester, still face considerable rate liabilities even after the cuts. In contrast to this, companies in smaller towns and rural areas are experiencing proportionally larger gains.

This uneven distribution could play a role in how regional economies develop. Areas with greater relief might end up seeing faster business growth than those where the burden remains. Policymakers have acknowledged the disparity, but balancing national taxation with local needs has long been a complicated challenge.

Business Rate Cuts and Resilience

Whether or not the cuts genuinely make companies more resilient has been another sticking point. Reducing fixed property costs obviously boosts your cash flow, but long-term stability depends on much more. The ability to access business finance and diversify your revenue streams is still crucial if business growth is actually going to be sustainable.

For that reason, the recent business rate changes might be best seen as a supportive measure rather than a growth strategy in and of themselves. How you use that support is where the real difference might come. If you can pair rate reductions with new investment in technology, staff, and customer service, then the rates might yet have a long-term impact.

Asset Finance is a Powerful Growth Driver

One of the best ways that a company can build on the 2025 business rate cuts is through asset finance. If you spread the cost of equipment over time, your business can avoid tying up large amounts of capital. This becomes even more valuable when drawn together with the savings made from lower tax bills.

Let’s say a manufacturing company saves £8,000 a year on business rates. If they choose to lease new machinery, then the extra funds can be redeployed for areas that finance can’t cover as holistically, like property repairs and staff training. It’s all about making fiscal policy and commercial finance solutions work together to generate real and tangible business growth.

Need Business Finance to Support Your Plans?

At Bluestar, we specialise in helping businesses like yours access competitive and flexible funding. Our services include asset finance, loans, leasing, and more, and all of our solutions are designed to support investment and kickstart growth for your business. We work with organisations across sectors to help them make the most of opportunities created by changes to business rates and other developments.

If you want to take advantage of the current landscape, we can help you find the right kind of business finance for your goals. Get in touch with us today, and let’s boost your business growth together.

FAQs

What are business rates?

They’re a form of tax that’s charged on commercial properties in the UK, and are set by local authorities based on a property’s rateable value.

Why do business rates change?

They’re periodically reviewed to mirror changes in property markets, government policy, and other external economic conditions.

What is asset finance?

It’s a way of funding equipment, vehicles, or machinery by spreading the cost over time instead of paying in full up front.

How can finance support business growth?

Finance gives you access to capital for investment, expansion, or cash flow management so your businesses can scale sustainably.

Are rate cuts guaranteed in future years?

No, changes depend on government policy and economic circumstances, so you need to plan flexibly.