Labour’s ‘Level Playing Field’ Tax to Hammer High Streets

Government measures in England to “level the tax playing field” between high street and online retailers risk backfiring — with Britain’s largest retailers,’ leisure and hospitality, facing the steepest costs not only on their stores, but also on their corporate headquarters and distribution centres experts today have warned.

According to new analysis by global tax services firm Ryan, the very 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.

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 £482 million a year in extra business rates on just their physical premises alone, compared to £262 million 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 £358.5 million across 3,274 properties, including 1,803 hypermarkets and superstores, 483 out-of-town retail warehouses, and 363 large shops.
  • Hospitality: up to £75 million across 650 properties.
  • Leisure: up to £48.5 million 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.
• By contrast, only 129 warehouses, just 1 in 12 of all large distribution warehouses, are operated by pure online-only retailers, compared with 247 run by high street chains to supply their own stores.
• Of the potential £2.29 billion total revenue which could be raised from a 10p surcharge, more than a quarter could come from RHL properties — the very sectors the measure was designed to help

High street at risk of heavier blow

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.

As the outcome of the 2026 revaluation will not be known until the Autumn, Ryan’s analysis is based on current rateable values. Using those figures, retail alone could shoulder up to £358.5 million of the surcharge. Retail properties across London (up to £109 million), the South East (up to £59 million), and the North West (up to £41 million) could be hardest hit, with retail properties in Westminster alone potentially seeing more than £49 million a year added to bills.

Large-format supermarkets, department stores, out-of-town retail, as well as their supporting HQs and warehouses are among those most exposed.

A blunt instrument

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.”