The Federation of Small Businesses (FSB) has called on the government to extend the 75% business rates relief discount for retail, hospitality and leisure sectors to throw a lifeline to thousands of small firms in town centres and on high streets that are vulnerable to increasing costs.

It warned that the Non-Domestic Rating Bill, which goes to the report stage in the House of Lords today (Monday 18 September), needs to be “more ambitious” and make it easier and more attractive for businesses to invest and improve by extending or upgrading their property.

Current proposals within the Bill ensure businesses in England making qualifying building improvements will not face higher business rates bills for 12 months however, the FSB believes this Improvement Relief should be extended to three years.

FSB national chair Martin McTague said: “Government needs to bring about a sea change when it comes to business rates. It’s long been known that the system is not fit for purpose and needs an urgent overhaul. Small firms have taken on huge cost burdens in recent times and the Chancellor has an opportunity here to take action on business rates, while enabling small businesses to grow.

“For many small businesses on the high street and town centres, the current relief is a lifeline. In April this is due to end, creating a cliff edge that will be hugely damaging to thousands of businesses. Ensuring the relief is maintained for those businesses that need it most will be key to their survival.

“While the business rates bill continues to work its way through the House of Lords this month, there’s a chance to make a real difference to ambitious small firms keen on investing in their properties, by extending Investment Relief to three years. For the cleaning supplies firm that wants to invest in new manufacturing space to take on bigger contracts, or the pub that has ambitions of serving more punters- this would be hugely beneficial. These small firms should not be stifled by the looming threat of higher business rates bills as a consequence of investment.”

Alongside extending targeted relief, the FSB is calling for an increase in the threshold for Small Business Rates Relief (SBRR) from £12,000 to at least £25,000, removing more than 250,000 small businesses from the rates system. Small firms should not be penalised at the edge of SBRR.