Despite the plaudits the Chancellor has won from lobby groups for increasing business rates relief in the Budget, economists are already warning that small companies may not actually benefit from his supposed tax cut.

As part of a long awaited review, George Osborne announced that 600,000 small companies would be exempt from the levy, starting next April. A further 250,000 would pay reduced rates.

Mr Osborne funded the policy by capping debt interest payments, used by larger firms to cut their corporation tax bills, to 30pc of earnings.

This would “level the playing field which has been tilted against our small firms”, he claimed.

The Chancellor described the changes as “the biggest tax cut for business in this Budget”.

However, Helen Miller, an associate director at the Institute for Fiscal Studies (IFS), says the Government has missed an opportunity to implement real business rates reform, choosing to “tinker with” the system instead.

“In the short run, the changes are likely to benefit people who rent property, because they have rent contracts, and you cannot increase rents overnight,” she says.

“But in the long run, we can expect a lot of that [change] to be capitalised into the value of the underlying properties.”