Burnham’s Small Business Rates Plan Could Cost £880 Million a Year

Andy Burnham has reaffirmed his commitment to reforming business rates in support of Britain’s high streets and small business, arguing there is “room for movement on tax” within Labour’s manifesto whilst maintaining his commitment to the party’s fiscal rules.

One of the key business rates proposals underpinning that agenda, first outlined during the Makerfield by-election campaign and repeated in his LBC interview last week, was a 50% increase in the threshold for 100% Small Business Rates Relief in England.

Forecasts by global tax firm Ryan suggest the policy could lift more than 140,000 additional small premises out of paying business rates altogether and reduce business rates liabilities by approximately £880 million per year.

The proposal would increase the threshold for 100% Small Business Rates Relief from a rateable value of £12,000 to £18,000, whilst extending the upper threshold for taper relief from £15,000 to £21,000.

Alex Probyn, Practice Leader for Europe and Asia-Pacific 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.”

Throughout the Makerfield campaign, Burnham argued that “online giants” should contribute more through higher taxation of large warehouses to support smaller businesses and Britain’s high streets.

In his LBC interview following this week’s keynote speech, he repeated that approach, arguing there was a case for higher business rates on warehouses and major developments on the outskirts of towns and cities to fund lower business rates for pubs and lift certain small businesses out of business rates altogether.

The Government’s business rates reforms introduced in April 2026 included a 2.8p business rates surtax on properties with rateable values above £500,000 in England.

Whilst political debate frequently focuses on large warehouses and so-called “online giants”, the existing surtax applies much more widely, including offices, manufacturing facilities, logistics assets, airports, data centres and larger retail premises.

The legislation already provides Government with the ability to increase that surtax significantly, from 2.8p to as much as 10p, without introducing an entirely new tax.

Ryan says that distinction is important because the existing legislative mechanism does not target warehouses alone. Any increase in the current surtax would apply across a much broader range of higher-value commercial properties unless Government introduced an entirely new approach.

Probyn added: “The attraction of increasing the existing surtax is obvious. It provides an established mechanism for funding additional reliefs elsewhere in the system. The risk is that higher property taxes increase the cost of occupying and investing in many of the sectors that underpin investment, jobs and economic growth. The primary issue remains that property taxes are now too high.”

Business rates are already devolved to Scotland, Wales and Northern Ireland. As Burnham also places devolution at the centre of his wider economic agenda, the debate may increasingly focus not only on how business rates are reformed in England, but also on who ultimately controls one of the country’s most significant business taxes.