Government plans to support the high street by increasing business rates on larger premises are likely to backfire and hit logistics firms already struggling to survive, the UK Warehousing Association (UKWA) warned.
In a recent policy paper about transforming business rates, the Treasury said it would outline in the Autumn Budget its plans for reforming business rates and that it was currently exploring a move to a “marginal tax rate system”, where successive bands are taxed at increasing rates.
The government is also considering how small business rates relief can better support business growth and remove ‘cliff edges’, which disincentivises small companies from expanding into additional properties.
It is thought the Chancellor will lower rates paid by these smaller firms, but increase the tax burden for larger premises, in an attempt to target internet giants like Amazon.
But the UKWA described these plans as “completely misguided”.
Edwin Morgan, policy and public affairs director at the UKWA, told Motor Transport: “The government justified the policy as a way to increase tax on the online giants, but it will capture any property with a rateable value above £500,000.
“This will include large warehouses that supply goods to high street shops, pubs and also the public sector, including the NHS.
“Although the properties might be large, logistics businesses operate in a very competitive market, often with thin margins.
“Our members already tell us that rising costs are a major concern, after recent increases to national insurance and the minimum wage.”
Morgan added: “The greatest irony of this policy is that the small retail and hospitality premises it is meant to benefit all rely on goods that are stored and distributed through warehouses.”
The British Retail Consortium (BRC) said food inflation would continue to rise and remain above 5% well into 2026 if large retailers such as supermarkets were hit by tax hikes: “This would effectively be robbing Peter to pay Paul, increasing costs on these businesses even further and forcing them to raise the prices paid by customers,” said the BRC’s CE Helen Dickinson.
The Budget will take place on 26 November.
