Amazon’s UK tax bill jump could jump by £29m next year as a result of changes to business rates that are scheduled to hit warehouses and online retailers the hardest.
The online retailer is likely to be among firms facing big tax rises following the chancellor’s autumn statement, according to analysis from the real estate adviser Altus Group.
Meanwhile, flagship department stores and hotels could shave millions off their tax bills, with bricks-and-mortar retailers receiving greater support as the government shakes up the business rates system and revalues more than 500,000 retail properties across England and Wales.
New rateable values, which are used to calculate the business rates tax, will be based on property values as of 1 April 2021. It means the pandemic “winners”, such as online retailers, will have a tax rise while taxes could fall for the pandemic “losers”, such as physical stores.
One of Amazon’s delivery stations in Longtown, Cumbria, will face a surge in its rateable value by 145%, Altus said. Amazon’s overall business rates could rise by about £28.75m next year and cost the business about £100m in extra tax over three years, taking into account inflation and before any tax relief is claimed.
However, Altus warned that smaller occupiers of industrial buildings and warehouses were at risk of financial collapse with tax rises piled on top of soaring costs.
Its UK president, Robert Hayton, said: “Most industrial buildings aren’t big sheds occupied by online retailers but house economy incubators, startups, and employment-supporting manufacturers.
“It feels like the valuers of the new draft lists have deployed a one-size-fits-all approach, and this could be hugely damaging.”
He added that the “market distortion” following the Covid period was likely to lead to hardship for many already-struggling businesses.
In a letter to the chancellor, Jeremy Hunt, the UK Warehousing Association said: “The antecedent valuation date of April 2021 is unfair: warehousing was supporting the economy during lockdown and consequently values were disproportionately high compared to other sectors.”
On the other hand, department stores Harrods and Selfridges, where values have plummeted since the pandemic, could have combined savings of about £15m.
The government said it was addressing the “bricks v clicks” tax imbalance, designed to support the high street and ensure retailers are not overpaying tax when the value of their property has slumped.
A spokesperson at Amazon said: “We made a total tax contribution of £2.77bn during 2021 – £648m in direct taxes and £2.13bn in indirect taxes.
“Based on analysis from PwC, Amazon ranks in the top 15 largest private sector taxpayers in the UK for taxes borne and collected, as well as for overall total tax contribution.”
