The Treasury has launched a “radical” review of the business rates system in England, and the findings are due to be released ahead of the 2016 Budget.

The current system has been in place since 1988 but this review opens the gates to changes, which are set to be widely welcomed in the business arena.

However the Treasury said the outcome is likely to be fiscally neutral; this means the overall amount of money collected from business will remain the same.

Chief secretary to the Treasury Danny Alexander said:

“The time has come for a radical review of this important tax.

“We want to ensure the business rates system is fair, efficient and effective.

“Lots and lots of people have views about how the business rates system doesn’t work, but as soon as you get into what an alternative system might look like there’s much less consensus.”

The review will look at how firms use property, what the UK could learn from other countries and how the system could be modernised to better reflect changes in property values.

This follows repeated criticism of the current system, where rates are charged to retailers based on the value of their shop or other commercial property.

It means companies with similar turnovers can pay dramatically different sums for business rates because their properties have varying “rateable values” depending on the size and location of their premises.

Rates paid by English companies are the highest of any European Union country and can be a company’s biggest expense after wages and rent.

They have also been blamed for the decline of many high streets and the rising number of vacant shops.

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