Tens of thousands of retail, leisure and hospitality sector firms will not pay any business rates this year, the chancellor has announced in the Budget.
Companies with a rateable value of less than £51,000 will be eligible for the tax holiday, Rishi Sunak said.
The measure applies to firms including shops, cinemas, restaurants and hotels.
It is part of a package of “extraordinary” measures to support the UK economy in the face of disruption from the coronavirus.
Mr Sunak described the business rates holiday as an “exceptional step”.
He said it would benefit museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and night clubs, all of whom will be hard hit if customers stay away to slow the spread of the coronavirus.
Businesses have been calling for a review of business rates for several years, arguing they make it hard for bricks and mortar retailers to compete with online rivals.
The measures will not apply to bigger retailers and leisure chains, some of whom have also criticised the business rates system. However, the chancellor said business rates as a whole would be reviewed later in the year.
Head of retail and consumer at Pinsent Masons, Tom Leman, said the announcement would be “extremely welcome news” for small businesses.
“On the basis the coronavirus is not a long-term issue for these businesses, it is crucial that they have the liquidity to see them through the worst.
“This will definitely help the cause and hopefully see many of them come out the other side ready to benefit from the increased spending power prompted by the money people are currently saving on their discretionary spend.”