Amazon could see its tax bill rise by £29m next year as a result of merchant rate changes that will hit warehouses and online retailers the hardest.
The online retail giant is likely to be among companies facing big UK tax hikes following the Chancellor’s autumn statement, according to new analysis from property adviser Altus Group.
Meanwhile, flagship department stores and hotels could save millions on their tax bills as brick-and-mortar retailers get more support.
This is because the Government is changing the commercial fee system and reassessing over half a million commercial properties in England and Wales.
It appears that the appraisers for the new preliminary listings have taken a one-size-fits-all approach, and this could be very damaging.Robert Hayton, UK Chairman of Altus Group
The new assessed values, which are used to calculate the business rate tax, will be based on property values as of April 1, 2021.
That means “winners” from the pandemic, like online retailers, will see a tax increase, while “losers” from the pandemic, like brick-and-mortar stores, could see their taxes drop.
One of Amazon’s delivery stations in Longtown, Cumbria, will face an increase in its taxable value of 145%, from £154,000 to £377,500, Altus said.
Amazon’s general business fees will rise by around £28.75m next year and could cost the online giant around £100m in extra taxes over three years, taking inflation into account and before a tax break is filed. .
Amazon has already reported an escalation in the amount it gave to the tax collector after the pandemic-fuelled online shopping boom.
In July, it said its total tax contribution rose to £2.77bn from £1.55bn a year earlier.
Storage supported the economy during lockdown and consequently values were disproportionately high compared to other sectors.Letter from the UK Storage Association to the Chancellor
However, Altus warned that smaller occupants of industrial buildings and warehouses risk financial collapse as a result of tax increases that add to the high costs.
Its UK chairman, Robert Hayton, said: “Most industrial buildings are not large sheds occupied by online retailers, but home economics incubators, start-ups and manufacturers supporting employment.
“It appears that the appraisers for the new preliminary lists have taken a one-size-fits-all approach, and this could be very damaging.”
He added that the “market distortion” that followed the unusual Covid period is likely to lead to difficulties for many already struggling businesses.
In a letter to Chancellor Jeremy Hunt, the UK Storage Association said: “The previous valuation date of April 2021 is unfair – storage was supporting the economy during lockdown and consequently values were disproportionately high in comparison with other sectors.
On the other hand, department stores Harrods and Selfridges, whose values have plunged since the pandemic, could see combined savings of around £15m.
The government said it was tackling the “bricks vs. clicks” tax imbalance, designed to support the high street and ensure retailers don’t overpay taxes when their property values have plummeted.
In addition, the Chancellor removed a potential online sales tax that was expected to ease the tax burden borne by brick-and-mortar stores over their online rivals.
An Amazon spokesperson said: “We made a total tax contribution of £2.77bn during 2021 – £648m in direct taxes and £2.13bn in indirect taxes.
“According to PwC analysis, Amazon ranks in the top 15 private sector taxpayers in the UK for taxes borne and collected, as well as overall total tax contribution.”
