Heathrow Faces Massive Rise in Business Rates After Budget Changes

Heathrow Airport is set to experience a significant increase in its business rates bill, potentially rising by as much as £145 million by the end of this parliament. This follows the introduction of a new super multiplier for business premises valued at over £500,000, announced by Chancellor Rachel Reeves in the recent budget. The move is designed to subsidise rates relief for small businesses but places major new fiscal demands on large properties such as airports.

Avison Young, a leading real estate adviser, has calculated that Heathrow’s business rates bill is forecast to surge to £265 million by 2028 to 2029 from the current £120 million. This increase coincides with a new valuation of the airport’s rateable value by the Valuation Office Agency, which has elevated the figure to £951 million from its previous £210 million assessment. The timing of the new multiplier and revaluation compounds the overall impact on airports across the country.

Gatwick Airport also faces sharp rises, with its rateable value increasing to £271 million from £71 million, doubling its annual bill to £84 million from £40 million. Stansted is projected to see a jump of £20 million in its final bill, while Luton anticipates an increase of £8 million. Manchester Airport has seen its valuation grow to £87 million from £25 million, with similar financial implications for its bottom line.

The ability of airports to pass these extra costs onto airlines and passengers is limited by regulation from the Civil Aviation Authority. Karen Dee, chief executive of AirportsUK, warned that such increases could force some airports to reconsider major investment projects and potentially jeopardise thousands of jobs. Local economies that depend on airports for connectivity, supply chains and tourism face additional challenges as the cost pressures ripple outward.

Dee criticised the policy as short sighted, warning it would likely result in fare increases and reduced choices for both families and business travellers. The Treasury did confirm a long term review of how business rates are calculated for airports, a process AirportsUK considers essential and which remains under active negotiation. Critics, including the Centre for Policy Studies, argue that offsetting small business relief by raising rates for larger enterprises places the competitiveness of the UK’s international gateways at risk. The move follows recent government approval for expansion projects at both Heathrow and Gatwick airports as part of broader efforts to stimulate economic growth and enhance global connectivity.