UPDATE 2-UK overhauls business rates to boost investment

(Adds detail on cost)

By Kate Holton

LONDON, Oct 27 (Reuters) - British finance minister Rishi Sunak overhauled business rates on Wednesday, cutting the rate for the pandemic-hit retail and hospitality sector, halting a planned annual increase and incentivising green property investments.

Setting out his budget to parliament, Sunak said he could not abolish a tax that raises 25 billion pounds ($34 billion) a year but he would try to ease the burden on businesses such as pubs, shops, restaurants, gyms, cinemas and leisure centres.

Business rates are charged on commercial premises based on the value of the property, a system that business owners have long blamed for giving an unfair cost advantage to online retailers such as Amazon. Sunak said under the new system property valuations would be reviewed every three years, rather than every five, an annual increase in business rates would be frozen for a second year and there would be a one-year 50% discount for businesses in retail, hospitality and leisure.

A new relief will also be given to companies investing in green technologies, such as solar panels and heat pumps.

"Apart from the COVID reliefs, this is the biggest single-year cut to business rates in 30 years," Sunak told parliament. "Taken together, today's budget cuts business rates by 7 billion pounds."

The one-year cut to business rates for retail, hospitality and leisure businesses will cost 1.86 billion pounds, while freezing business rates for a year will have an ongoing cost of around 900 million pounds a year going forward.

Sunak's Treasury department had been reviewing the unpopular business rate system, which was suspended during the pandemic for the worst-hit sectors.

The Confederation of British Industry welcomed the short-term assistance but said it was a missed opportunity for wider reform. ($1 = 0.7272 pounds) (Reporting by David Milliken and Kate Holton; Editing by Paul Sandle and Costas Pitas)