Andy Burnham's proposed overhaul of business rates could be a high-stakes gamble for Labour's leadership hopeful. Touted as a boost for Britain's beleaguered high streets, the plan comes with an estimated annual price tag of £880 million – a sum that has sparked concerns about how it would be financed.
Analysts at Ryan, a global tax firm, predict that Burnham's proposed expansion of Small Business Rates Relief would result in over 140,000 additional small business premises being exempt from business rates. The threshold for 100 per cent relief would rise from £12,000 to £18,000, while the upper limit for tapered relief would increase from £15,000 to £21,000 – saving businesses an estimated £880 million annually in rates liabilities.
Burnham has suggested funding these reductions by hiking business rates on large warehouse developments used by online retailers like Amazon. He argues that there is still "room for movement on tax" within Labour's 2024 manifesto and suggests higher rates on out-of-town warehouses would enable cuts for high street businesses, which he believes offer significant social benefits.
However, tax specialists have expressed doubts about the policy's viability, questioning whether larger businesses will be expected to bear an even greater financial burden. Alex Probyn, practice leader for property tax at Ryan, highlighted the challenge of funding a revenue-neutral policy, pointing out that larger commercial properties already contribute more through a business rates surtax.
The Confederation of British Industry (CBI) has long warned about the "growth-killer" effects of the existing business rates system. The UK's high property tax burden – four times that of Germany relative to GDP – has seen 32 per cent of firms cancelling or delaying investment due to business rates, according to CBI chief economist Louise Hellem.