Andy Burnham’s plan to overhaul business rates in favour of small high street firms could cost around £880m a year, according to new analysis.
The proposals would lift more than 140,000 additional small premises out of business rates altogether, forecasts from global tax firm Ryan suggest.
Burnham has proposed increasing the threshold for 100 per cent small business rates relief in England by 50 per cent, from a rateable value of £12,000 to £18,000.
The upper threshold for tapered relief would also rise from £15,000 to £21,000 under the plan.
The policy is designed to ease the burden on small high street businesses, including retailers, pubs and hospitality operators, many of which have faced sharp cost increases in recent years.
Burnham has said the move could be funded by higher property taxes on large warehouses and major out-of-town developments, with online giants such as Amazon among those likely to be targeted.
Speaking on LBC last week, Burnham said there was “room for movement on tax” within Labour’s manifesto, while maintaining that he would stick to the party’s fiscal rules.
Ryan estimated that the proposed changes would reduce business rates liabilities by around £880m, based on government tax data.
Alex Probyn, practice leader for property tax at Ryan, said supporting small businesses was a “great policy objective”, but raised questions over how the measure would be funded if it had to remain revenue neutral.
He said: “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 debate comes after business rates reforms introduced in April added a 2.8p surtax on properties in England with rateable values above £500,000.
However, many smaller retailers, hospitality businesses and leisure operators are still facing significant increases in rates bills over the next three years.
Burnham has argued that online giants should make a greater contribution to help support bricks-and-mortar businesses and revive Britain’s high streets.
Click here to sign up to Retail Gazette‘s free daily email newsletter
