Tesco to hand back £585m business rates relief as supermarket sales boom
Retailer will return millions to government after windfall from tax break during pandemic
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Your support makes all the difference.Tesco has said it will hand back £585m in business rates relief that it has received during the coronavirus pandemic, after supermarket sales boomed.
The UK’s largest grocer has been one of the biggest beneficiaries of a tax break granted by the chancellor in March to help struggling shops, restaurants and music venues.
However, with non-essential stores closed during a series of local and national lockdowns, the UK’s supermarkets have benefited from some of their busiest weeks ever.
Tesco’s chairman, John Allan, said the board “are conscious of our responsibilities to society” and that the company did not need the saving.
Real estate adviser Altus Group calculated that six leading UK supermarkets – Tesco, Sainsbury’s, Asda and Morrisons, and German rivals Aldi and Lidl – will save almost £1.9bn thanks to the suspension of business rates.
Tesco’s move will increase pressure on its rivals to make similar commitments to hand back their business rates windfalls.
Sainsbury’s came under fire for announcing that it had received £230m of rates relief and handed shareholders £231m in dividends.
Mr Allan said Tesco’s board agreed unanimously to repay the rates relief it has received.
“We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society,” he said.
“We firmly believe now that this is the right thing to do, and we hope this will enable additional support to those businesses and communities who need it.”
Rates relief was first announced by the chancellor for retail, leisure and hospitality firms until March 2021.
The data from Altus Group showed that Sainsbury's is expected to save £498m from its rates holiday for the year — although Sainsbury’s said the figure is closer to £450m.
Last month, Sainsbury’s said it had received rates relief worth £230m for the half-year to September in an update that also saw it reveal plans to axe 3,500 jobs.
However, the company came under fierce criticism as it also declared an interim dividend of 3.2p, plus a special dividend of 7.3p for shareholders.
In November, the boss of retailer B&M Bargains, which has stayed open through the lockdowns, paid his offshore family trust £44m in dividends after the company saved £38m under the rates holiday.
Additional reporting by PA news agency
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