A Government bid to “level the tax playing field” between high street and online retailers risk backfiring – with England’s largest retailers, from the hospitality sector, supermarkets and department stores to out-of-town chains, facing the steepest costs not only on their stores, but also on their corporate headquarters and distribution centres, according to global tax firm Ryan.
According to new analysis by Ryan, the businesses underpinning high street employment and supply chains will be left paying far more than the online giants the policy was designed to target.
From April 2026, the Treasury will introduce a new business rates surcharge of up to 10p on properties with a rateable value (RV) of £500,000 or more. The aim is to fund permanently lower multipliers for smaller retail, leisure, and hospitality premises.
£482m extra costs
But Ryan’s analysis shows the policy will widen – not close – the tax-to-turnover gap:
- Retail, leisure and hospitality (RHL) could face up to £482m a year in extra business rates on just their physical premises alone, compared to £262m for large distribution warehouses
- Almost three times as many RHL properties (4,353) could be hit compared to 1,589 large distribution warehouses
- Within RHL: retail: up to £358.5m across 3,274 properties, including 1,803 hypermarkets and superstores, 483 out-of-town retail warehouses, and 363 large shops; hospitality: up to £75m across 650 properties; and leisure: up to £48.5m across 429 properties.
- Many of the same major retailers will also see their HQs and large distribution warehouses captured too, compounding the cost across entire supply chains
- While only 129 warehouses, just one in 12 of all large distribution warehouses, are operated by pure online-only retailers, compared to 247 run by high street chains to supply their own stores
- Of the potential £2.29bn total revenue, which could be raised from a 10p surcharge, more than a quarter could come from RHL properties.
Bluntness is stark
The 2026 revaluation will reset rateable values based on open market rents on 1 April 2024, taking effect from 1 April 2026. Some properties currently below the £500,000 threshold may cross it and vice versa.
Alex Probyn, practice leader, Property Tax (Europe & Asia-Pacific) at Ryan, said: “The bluntness of this policy is stark.
“Only 129 properties are pure online retailers, yet thousands of supermarkets, department stores and out-of-town chains – plus the HQs and distribution centres that support them – will be dragged into this new tax.
“Instead of targeting the online operators it was designed to address, the policy risks penalising the very businesses that anchor the high street and provide mass employment.”
As the outcome of the 2026 revaluation will not be known until autumn, Ryan’s analysis is based on current rateable values.
