Key facts
- Prime Minister Andy Burnham's plan to increase warehouse taxes to fund business rate cuts for pubs and shops has been met with warnings from the UK Warehousing Association (UKWA).
- UKWA argues that the proposed tax hikes could backfire, leading to higher costs for high street businesses and consumers.
- The trade body represents major retailers including Amazon, Co-op, and John Lewis.
- Warehouses' business rates increased by 9% in April, with a more significant rise for a portion of sites.
- UKWA contends that it is not feasible to exclusively target online retailers, as warehouses support both online sales and physical stores.
Prime Minister Andy Burnham's plan to increase taxes on warehouses to fund a 20% business rates cut for pubs and shops has drawn criticism from the UK Warehousing Association (UKWA). The trade body, representing major retailers like Amazon, Co-op, and John Lewis, warned that the proposed tax hikes could backfire and lead to higher costs for high street businesses and consumers.
In a letter to Burnham, UKWA chief executive Clare Bottle stated that the business rates system is complex and acts as an inhibitor to investment. She argued that tweaking thresholds and reliefs, supposedly funded by warehouses of 'online giants,' would ultimately mean higher costs for consumers. Bottle emphasized that warehouses serve a dual purpose, stocking goods for both high street shops and online orders, making it difficult to target only online sellers.
The UKWA highlighted that warehouse business rates already rose by 9% in April, with a more substantial increase for 23% of sites. They also pointed out that large warehouses face a higher multiplier (50.8p) compared to small retail and hospitality firms (38.2p), a change intended to target 'online giants.' However, UKWA contends that this distinction is unrealistic as most major retailers rely on warehouses for both their online and physical store operations.
According to a report by Savills, high street retailers occupied 97 million square feet of warehouse space in 2024, compared to 69 million square feet for online retailers. UKWA urged Burnham to refrain from imposing further tax hikes until next April, after the recent increases have been in place for a year, and to conduct a formal consultation with warehouse occupiers.