Eurotunnel, the operator of the Channel Tunnel, has announced the cessation of its UK project portfolio, citing “unsustainable” taxation levels that render future investments “non-viable.”
The company stated that it anticipates a business rates increase of approximately 200% commencing next year.
Eurotunnel has criticized the government, asserting that the amplified costs are “clearly contrary” to the stated objectives of economic expansion and increased investment.
HM Treasury has indicated its intention to support firms “hit hardest” by tax increases and affirmed its commitment to continued dialogue with affected industries regarding these concerns.
Eurotunnel’s statement precedes the forthcoming Autumn Budget, where Chancellor Rachel Reeves is scheduled to outline the government’s fiscal plans.
Speaking with the BBC, Eurotunnel’s Chief Executive Officer, Yann Leriche, stated, “All our investments, all our plans are becoming unsustainable.”
“As you know, business rates, it’s a property tax. And our property – the Channel Tunnel – has not changed. It’s still the same tunnel, the same terminal, the same trains. Everything is equal.”
“And so to face such an increase… is a real issue for us. Because we know in rail, we invest for the long term.”
The prospective 200% increase in business rates for Eurotunnel stems from updated assessments conducted by the Valuation Office Agency (VOA), which advises the government on property valuations for taxation and benefits purposes.
Mr. Leriche said that while discussions are ongoing, the change could see its business rates rising from £22m to £65m.
A Eurotunnel spokesperson stated that such a rise in business rates, in conjunction with other taxes, could elevate its total tax burden to approximately 75% on UK earnings.
The VOA informed the BBC that the agency “does not determine business rates” and that “next year’s liability has not yet been confirmed.”
“This unparalleled and unsustainable level of taxation makes any future investment in the UK non-viable,” Eurotunnel asserted.
“It is therefore impossible to develop new services, create jobs, and pursue what is needed for the long-term development of our activities.”
The company affirmed that it had “no other choice but to freeze our future investments in railway assets in the UK, starting in 2026.”
The BBC has requested clarification from Eurotunnel regarding the specific investments that have been suspended. The Financial Times reported that its chief executive, Yann Leriche, told the newspaper it had scrapped plans to reopen a freight terminal in Barking and to run a new direct freight service from Lille.
The Channel Tunnel is a subsea railway tunnel connecting the United Kingdom and France. Colloquially known as the “Chunnel”, it comprises three distinct tunnels: two rail tunnels accommodating freight and passenger trains, and a service tunnel.
The Folkestone-Calais link is currently operated by Eurotunnel.
Eurostar, a separate entity and Eurotunnel’s largest customer, operates passenger rail services through the tunnel, connecting London with various European cities including Paris, Brussels, and Amsterdam.
A VOA spokesperson told the BBC it had engaged with Eurotunnel and their advisers “on multiple occasions over the past eighteen months to discuss their valuation and fully explain our approach”.
“These discussions remain ongoing, and we are committed to continuing constructive engagement.”
The spokesperson added Eurotunnel could formally challenge the valuation.
In anticipation of the Budget, Eurotunnel has called upon the government to “provide certainty on business rates.”
Eurotunnel’s concerns are echoed by supermarket executives, who contend that certain aspects of the government’s business rates reforms present challenges for their sector.
Business rates are a form of taxation levied on non-domestic properties, including retail establishments, public houses, and office spaces.
Chancellor Reeves is expected to announce the specific business rates and related details to be implemented in April 2026 during the Budget.
In response to Eurotunnel’s pronouncements, HM Treasury stated that it refrains from commenting on “speculation surrounding prospective alterations to tax policy.”
The Treasury said that once it understood the “complete” revaluation picture, it would be in a position to “make final decisions” on support.
Ebbsfleet and Ashford services stopped in 2020, but a Virgin Trains application now has approval.
Virgin Trains plans to start rival passenger rail services through the tunnel from 2030.
They would be the first two-level high-speed trains to run through the Channel Tunnel.
The EU’s much-delayed Entry/Exit System will change the way UK passengers travel to 29 countries.