The Channel Tunnel operator has frozen all British investment plans after Government valuers proposed almost tripling its annual property tax burden just days before Rachel Reeves delivers her Budget.
Eurotunnel confirmed it would suspend investment in UK railway assets from 2026 following the Valuation Office Agency’s assessment, which would push the firm’s business rates from £22million to £65million a year.
The rise amounts to an increase of almost 200 per cent in annual taxation.
Among the shelved projects is a £15million freight terminal planned for Barking in east London.
The site was intended to support dedicated freight services from France and free capacity for passenger operations.
Eurotunnel chief executive Yann Leriche said the proposed rates would make “all of our investments loss-making, so we won’t be making any more investments”.
The company has halted all British investment activity with immediate effect. Executives described the proposed increases as “unjustified and confiscatory in nature”, arguing they would severely limit the business’s ability to invest in the UK.
The company estimates that combined taxation could reach about 75 per cent of its UK earnings under the plans.
Eurotunnel said: “This unparalleled and unsustainable level of taxation makes any future investment in the UK non-viable.”
The Channel Tunnel operator has suspended UK investment projects following a government proposal to nearly triple its yearly property tax bill
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It added it would become “impossible to develop new services, create jobs, and pursue what is needed for the long-term development of our activities”.
The operator voiced strong disagreement with the scale of the proposed rates. Under the plan, its 2026 bill would initially rise to £35million before increasing to the full £65million in later years.
Eurotunnel has launched legal action against the VOA, citing the 1986 concession agreement between Britain and France. Mr Leriche said the company notified the Department for Transport it intended to pursue this route.
He warned court action could theoretically reduce the firm’s tax obligation to zero, which he said would represent “a huge loss” for the UK government.
The chief executive warned that court action could theoretically reduce the firm’s tax obligation to zero, which he said would represent “a huge loss” for the UK government
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He emphasised the company was prepared to pay “a fair amount of taxes” while challenging what he described as an “unpredictable, opaque and disproportionate” assessment process.
Independent analysis commissioned by the operator suggests the cancelled investments would have created more than 750 jobs and generated £1billion in economic benefit.
The stalled Barking terminal and proposed freight service to Lille would have run mainly at night, easing congestion near Dover and reducing road traffic. Eurotunnel has also highlighted what it sees as disparities in how transport providers are taxed.
The company said it “believes that it is currently unduly penalised compared to its competitors whose activities are more carbon-intensive, less-taxed”. The suspension of the freight programme runs counter to the Government’s aim of shifting freight from roads to rail.
The cancellation of the expansion project limits opportunities to increase rail-based freight capacity through the Channel Tunnel. The increased tax burden would also apply to future operators using tunnel infrastructure.
Eurotunnel confirmed it is required to pass on fifty per cent of business rates to high-speed services, a cost that could affect new entrants such as Virgin Trains and Trenitalia, who recently obtained regulatory clearance to compete with Eurostar.
The Treasury said it would support businesses “hit hardest” by changes to taxation and would continue discussions with affected industries.
Officials declined to comment on “speculation around future changes to tax policy” ahead of the Chancellor’s Autumn Statement next week.
The VOA defended its valuation work, saying it had met Eurotunnel representatives “on multiple occasions over the past eighteen months to discuss their valuation and fully explain our approach”.
The agency noted that “next year’s liability has not yet been confirmed” and said formal valuation challenges remain open.
Government sources said decisions on support would follow completion of the full revaluation process.
The VOA added that it provides valuations but “does not determine business rates”, with Chancellor Rachel Reeves expected to confirm rates and implementation details from April 2026.