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Eurotunnel, the company responsible for operating the Channel Tunnel, has announced a suspension of its projects within the UK due to what it describes as “unsustainable” taxation levels, which have rendered any future investments unfeasible. The firm revealed that it had been notified about a planned 200% increase in its business rates starting next year. Eurotunnel criticized the government, stating that these heightened costs directly contradict the stated goals of fostering economic growth and encouraging investment.
This development comes just days before the upcoming Autumn Budget, in which Chancellor Rachel Reeves is expected to outline the government’s tax and spending strategy. The drastic rise in business rates stems from new valuations conducted by the Valuation Office Agency (VOA), which advises the government on property assessments used for taxation purposes. A representative from Eurotunnel explained that combined with other taxes, the total tax burden could reach around 75% of the company’s UK earnings. The VOA clarified that it does not set business rates and that the final liability for the next year has yet to be confirmed.
Eurotunnel expressed serious concern over the situation, describing the tax pressures as unprecedented and unsustainable, which it says compromises its ability to invest in the UK long-term. The company stated, “It is therefore impossible to develop new services, create jobs, and pursue what is needed for the long-term development of our activities.” As a result, Eurotunnel announced it would halt investment in UK railway assets from 2026. While the company did not specify all affected projects, reports in the Financial Times indicated that plans to reopen a freight terminal in Barking and to launch a direct freight service from Lille have been scrapped.
The Channel Tunnel connects southern England and northern France via three tunnels: two rail tunnels for freight and passenger trains, and a service tunnel. Eurotunnel manages this key link between Folkestone and Calais. Eurostar, a separate company and major Eurotunnel customer, operates passenger trains on this route to various European destinations, such as Paris, Brussels, and Amsterdam. The VOA pointed out that they have engaged with Eurotunnel and its advisors on multiple occasions over the past 18 months to discuss valuation concerns and explain their approach. They emphasized that discussions are ongoing and that Eurotunnel can formally challenge the valuation if necessary.
In the run-up to the Budget, Eurotunnel urged the government to provide clarity on business rates, joining other sectors such as supermarkets that have voiced concerns about forthcoming business rate reforms. Business rates function as a property tax on commercial premises including shops, pubs, and offices. Chancellor Reeves is expected to confirm the business rates levels during the Budget, with any changes planned to take effect in April 2026. The Treasury responded to Eurotunnel’s statements by declining to comment on speculative tax policy changes, indicating that final decisions and support measures would follow once the full revaluation outcome is known
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