Chancellor Rishi Sunak has announced a one-year 50% business rates discount for retail, hospitality, and leisure sectors.

Sunak said the tax cut worth was almost £1.7bn, and with Small Business Rates Relief, more than 90% of all eligible businesses will see a discount of at least 50%.

He said the discount for retail, hospitality and leisure would help those hit “hardest by the pandemic”, business that were “crucial to the high street”.

However, UKHospitality CEO Kate Nicholls cautioned that the relief is capped at £110k per company, meaning that was the maximum rates bills would be reduced.

She said: “While it will benefit many smaller businesses, this will limit the impact for larger premises and multi-site businesses.”

Sunak said following a review of business rates, he had ruled out scrapping the system, as it would require an extra £25bn in borrowing, raising taxes or cutting services, something he was “not willing to do”.

He said the system would be modernised, with more frequent revaluations every three years, making the system “fairer for two million business properties”.

There will be a new relief to support green investment for next five years, including any premises which used solar panels.

Business rates improvement relief will be introduced, meaning any business which makes improvements to property will pay no extra business rates for 12 months.

Next month’s planned increase in the business rates multiplier will be cancelled, saving businesses £4.5bn over the next five years, Sunak said.

Business rates relief will be extended for another year to 2023, saving small businesses £30m.

Sunak told the Commons: “Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms, any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000.

“Apart from the Covid reliefs, this is the biggest single-year cut to business rates in 30 years.

“We’re unleashing the dynamism and creativity of British businesses with a simpler, fairer, more competitive tax system.”

The Chancellor also said the UK would carry out the “most radical simplification of alcohol duty” for over 100 years.

He said there would be just six duty rates on alcohol: the stronger the drink, the higher the rate.

This will mean that some stronger spirits and wines will become more expensive, but weaker alcohols like beer and rosé will become cheaper.

There will also be a new “small producer relief” which will include small cider makers for the first time, in a similar way to small brewers’ relief.

He says he will end the “irrational duty premium” of sparkling wines costing more than still wines of equivalent strength.

Duty is also being cut on fruit ciders to bring it in line with apple ciders, he said.

As well as his alcohol duty announcements, Sunak said he wanted to support “the home of British community life for centuries” - pubs.

The chancellor’s “draught relief” will apply a 5% cut to duty on draught beer and cider served from draught containers over 40 litres.

“That’s the biggest cut to cider duty since 1923,” he says. “The biggest cut to fruit ciders in a generation. The biggest cut to beer duty for 50 years.”

He said this was not a temporary measure, but a “long-term investment in British pubs of £100m a year and a permanent cut in the cost of a pint by 3p”.

UKHospitality’s chief executive, Kate Nicholls, said it had been lobbying for reform of the business rates system, and so welcomed the Chancellor’s move to extend the 50% business rates relief.

She said: “The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.

“The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.

“Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13% inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector.

“The most effective way to achieve this would be to maintain the current lower 12.5% of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.

“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”