The UK government's plan to alter business rates in a bid to support the high street will hit warehouses and online sellers like Amazon.com Inc (NASDAQ:AMZN), analysis from real estate advisor Altus Group (TSX:AIF) revealed.
The retail giant could see its annual tax increase by £29mln next year following the changes announced in chancellor Jeremy Hunt's Autumn Statement.
The overhaul, which will see the revaluation of more than 500,000 retail properties across England and Wales, will cut millions off 'bricks-and-mortar’ retailers' tax bills and is designed to level the tax imbalance between online and physical retailers.
By next April rateable values, the figure for calculating business rates, will use property values from April 2021 rather than pre-covid rates. This means companies that benefited from the pandemic, such as online retailers, face rising taxes, whereas 'losers', such as physical stores, could see taxes falling.
Department stores Harrods and Selfridges, where property values have declined since the pandemic, could have combined savings of about £15mln, according to Altus.
Amazon’s Cumbria delivery station will see a 145% increase to its rateable value, Altus predicted.
“We made a total tax contribution of £2.77bn during 2021 – £648mln in direct taxes and £2.13bn in indirect taxes,” a spokesperson of Amazon told the Guardian.
Financial collapse could loom for smaller owners of warehouses and industrial builds as the change piles yet more costs on top of already bloated bills, Altus warned.
“It feels like valuers of the new draft lists have deployed a one-size-fits-all approach, and this could be hugely damaging… warehousing was supporting the economy during lockdown and consequently values were disproportionately high,” said Robert Hayton, UK president of Altus.