The review, set to report back by Budget 2016, will examine the structure of the current system which is paid annually on 1.8m properties in England.  Business rates brought in £20.5bn in England in 2013-14.

Danny Alexander, chief secretary to the Treasury said: ‘Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition.

‘Now 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.’

The review will look at a number of possible options, including moving away from a property based business tax towards alternative tax bases.

It will also consider alternative ways to incentivise local authorities to drive local growth, the impact of the business rates system on UK competitiveness and specifically on SMEs, and look at whether investment in plant and machinery, energy efficiency improvements or other similar property improvements be treated differently by the business rates system.

Neil Stockham, BDO tax partner, described the review of business rates as ‘welcome but long overdue’ and warned discussion was likely to be complex.

‘The challenge will lie in how any positive changes can be introduced to replace the current outmoded system ‎and still preserve tax neutrality. There is likely to be a long period of review and consultation such that any benefits of change are unlikely to filter through until well into the next parliament.

‘It will therefore be a watching brief for some time yet which will offer little respite for mid-market retailers who continue to feel the pain of rates set in 2008, rateable values which take no account of the fall in property prices since the recession,’ Stockham said.

The consultation on the business rates review closes on 12 June 2015 and details are here