Increases in business rates in England are to be capped at 2%, instead of being linked to inflation, the Chancellor, George Osborne, has announced.
Business rates were set to rise by 3.2% next year, based on September's Retail Prices Index measure of inflation.
Mr Osborne said he planned to encourage small businesses on to High Streets by cutting £1,000 from their rates bill.
Firms will also be allowed to pay their rates in monthly instalments.
The chancellor said the cap could save businesses up to £3,375.
The £1,000 discount will apply to retail premises, including pubs, cafes and restaurants, with a rateable value of up to £50,000 for two years.
He also pledged help for the High Street by introducing a "reoccupation relief" - halving business rates for businesses moving into vacant premises.
In Scotland, a different business rates system applies. Earlier this year, local councils in the country were given the powers to adjust their own business rates relief packages to reflect local needs.
In a separate move, the chancellor announced he would abolish employer National Insurance contributions for the under-21s from April 2015, with the exception of those earning more than £42,285.
Retail and business lobby groups were pleased by the moves. The British Retail Consortium said the rates cap on its own would release an extra £90m into the UK economy next year.
Helen Dickinson, the director general of the British Retail Consortium (BRC), said: "The BRC has campaigned for a 2% cap, and reform of the business rates system, and it is extremely welcome to hear it announced.
Mr Osborne also promised to look at reforming the business rate system for 2017, a move many business lobby groups, including the BRC, have been calling for.
Ms Dickinson said: "The BRC is already conducting a detailed study into options to improve the business rates system with tax experts EY and look forward to playing a full part in the discussions that will take place with government on the reform of the system."
Alexander Jackman, head of policy at the Forum of Private Business, said his members would benefit: "There are some positive measures in today's speech to help reduce the costs of doing business.
"With fuel duty frozen, £1,000 rebate on business rates and a subsidy on employing young people, there are measures worth thousands to small businesses. Within a time of constrained budgets, it's good to see the chancellor has listened to the concerns of small businesses around rising costs."