UK retailers warn Burnham warehouse tax plan could widen business rates burden

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Retailers warn on warehouse tax

Highlights

Burnham proposes funding a 20 per cent business rates cut for pubs, clubs, and music venues by increasing rates on warehouses and large commercial sites.
Tax firm Ryan estimates doubling the top warehouse rate would not generate sufficient revenue for the proposed cut, with a maximum legal increase yielding about £1.32 billion annually.
Retailers warn broader rate hikes on 17,000 large commercial properties could raise sector costs, especially for supermarkets, risking price inflation and structural imbalances.

Warehouse levy funding gap comes into focus

As reported by Financial Times, Burnham says he wants to fund a 20 per cent cut in business rates for pubs, clubs and music venues by imposing higher rates on warehouses and other large commercial sites. He has also linked the idea to higher taxation on online tech companies and their warehousing operations, arguing that the high street needs greater policy support.

Analysis by tax firm Ryan says there are only 1,900 large warehouses in England already paying the top business rate, and only 129 of those are operated by online-only retailers. Ryan's experts say that even a doubling of the top warehouse rate would not generate enough revenue to pay for the proposed reduction.

That raises the prospect that a government led by Burnham could rely on existing legislation to increase the surcharge on 17,000 of the UK's largest and most expensive commercial properties. Alex Probyn, practice leader on property tax at Ryan, says the maximum increase under current rules could generate about £1.32 billion in additional annual revenue without creating a new tax.

Retailers warn of broader costs for stores and consumers

Retail executives say such an approach risks redistributing costs within the sector rather than fixing the structure of business rates. One retail chief executive says a higher surcharge on large properties would amount to another rearranging of the deckchairs instead of addressing the underlying problem in the tax system.

A FTSE 100 retail chief executive says he would accept higher rates on warehouses because shops pay a disproportionate share of business rates, but he is concerned that a wider rise for larger properties would damage the whole sector. He says heavier charges on big-box sites would hit supermarkets especially hard because they operate on thin margins, and that those costs would likely feed into price inflation.

High street retailers have long argued that business rates make physical stores expensive to run while online retailers carry a lighter property tax burden. But the largest UK warehouses are not limited to online groups, with major sites owned by Next, Lidl, Tesco, John Lewis, Sports Direct, Marks and Spencer and Amazon, and warehouse rates bills have already risen 58 per cent over the past three years.

Robert Taylor, head of research at real estate adviser DTRE, says the warehouse is now central to the modern high street and supports development, jobs and growth. Helen Dickinson, chief executive of the British Retail Consortium, says Burnham is right to focus on high street regeneration, but adds that it remains unclear how the proposal would work in practice.

Andy Burnham’s post–by-election momentum was previously discussed in our coverage, focusing on how his domestic success has reshaped Labour’s positioning and raised questions about the party’s next phase. We noted that the debate also extends to how a future Burnham-led government might handle high-stakes external pressure—particularly the political risks for UK leaders seen as overly accommodating in relations with Washington.

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