Andy Burnham's business rates overhaul could cost £880million annually, bombshell new analysis reveals

The Makerfield MP is pushing for a 50 per cent increase in the threshold for 100 per cent small business rates relief in England

The Makerfield MP is pushing for a 50 per cent increase in the threshold for 100 per cent small business rates relief in England

Andy Burnham's proposal to overhaul business rates to support small high street firms could cost around £880million annually, a bombshell new analysis has revealed.

The former Greater Manchester Mayor, who could become Prime Minister in just a fortnight, intends to fund support by taxing large warehouses used by online giants, including Amazon.

Mr Burnham opened the door to tax rises during an interview with LBC last week, claiming there is "room for movement on tax" within Labour's 2024 manifesto.

Global tax firm Ryan forecasts the policy could exempt 140,000 additional small premises from paying business rates altogether.

Alex Probyn, a practice leader for property tax at Ryan, said: “Supporting small businesses is a great policy objective.

“The concern is how that is funded if things have to be revenue neutral.

“Larger commercial properties are already contributing more through the existing business rates surtax to fund lower liabilities for retail, hospitality and leisure.

“The obvious question is whether they are now going to be asked to contribute even more."

The proposal would be likely to reduce business rates liabilities by about £880 million, based on Government tax data.

It would also increase the threshold for 100 per cent small business rates relief from a rateable value of £12,000 to £18,000, and extend the upper threshold at which firms receive tapered relief up to £21,000, from £15,000 currently.

In the run-up to the Makerfield by-election, Mr Burnham argued that “online giants” should contribute more through higher taxation of large warehouses to support smaller businesses and Britain’s high streets.

His recent LBC interview saw the prospective prime minister indicated higher business rates on major developments on the outskirts of towns and cities, all to fund lower business rates for pubs and lift certain small businesses out of business rates altogether.

Business rates reforms introduced by the Government in April included a 2.8p business rates surtax on properties with rateable values above £500,000 in England.

However, many small businesses, particularly in the retail, hospitality and leisure sectors, are facing significant increases in tax payments over the next three years.

Andy Burnham's proposal comes as two of Britain's biggest business organisations warned Labour's planned increases to the national living wage beyond £13 an hour could damage the jobs market and fuel inflation.

They argue that employers are already struggling to absorb higher labour costs.

The Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC) said successive above-inflation increases have placed mounting pressure on businesses, with many already cutting jobs, delaying investment and raising prices.

A BCC survey found this year's 4.1 per cent increase, which raised the national living wage to £12.71 an hour, has already prompted one in 10 firms to reduce staffing levels.