Budget 2021: Asda, Morrisons and Tesco vow to refuse business rates relief

Asda, Morrisons, Tesco and Sainsbury’s have vowed to refuse a business rates relief offered today’s Budget after supermarkets paid back the £1.7billion they saved in the Covid tax break last year.

Chancellor Rishi Sunak has said that the business rates holiday will be extended until the end of June for hard-hit retail, hospitality and leisure firms before shifting to a two-thirds discount for the rest of the year.  

Non-essential retailers have been forced to close during lockdowns and tiered restrictions since last March.

But some Britain’s biggest supermarkets have said they will not take advantage of the scheme, as they have continued to operate throughout the pandemic.

Asda said it would not take advantage of the business rates holiday following Rishi Sunak's announcement earlier today. Last December it said it would hand back £340m it saved in Covid relief

Asda said it would not take advantage of the business rates holiday following Rishi Sunak’s announcement earlier today. Last December it said it would hand back £340m it saved in Covid relief

In December, Asda announced it would hand back £340million it saved in business rates relief.

Sainsbury’s confirmed it would hand back around £440m, while Tesco and Morrisons agreed to respectively return £585 million and £274 million.

All four supermarkets today said they would continue to pay their business rates bills in full during 2021-22 and will not accept the offer of rates relief announced today by the Chancellor in his spring Budget.

Roger Burnley, Asda chief executive and president, said: ‘We have always sought to support colleagues, customers and communities during the pandemic and will continue to do so as long as Covid remains a threat.

Sainsbury's has followed suit with three other major supermarkets, which have been able to stay open throughout the Covid-19 pandemic

Sainsbury’s has followed suit with three other major supermarkets, which have been able to stay open throughout the Covid-19 pandemic

‘There are clearly many industries and businesses that have been hard hit by the pandemic and we hope that by continuing to pay business rates in full this year we can continue to support the nation’s economic recovery from the pandemic.’

A Tesco spokesperson said: ‘We announced our decision to return rates relief for last year in December, because we felt it was the right thing to do, and we were financially strong enough to be able to return it. 

‘Those same reasons still stand today and so we will not take advantage of the relief. Whilst we support retailers availing of this relief where it’s needed, this is a short term remedy; the real issue is the absolute need for reform of the rates system and we hope that this is something the government will move on this year.’

Mr Sunak said in his Budget that a business rates holiday would continue until the end of June

Mr Sunak said in his Budget that a business rates holiday would continue until the end of June

Supermarket Morrisons has said it will pay its business rates bill in full, while the Co-op is said to be considering the move. 

Several supermarkets including Tesco, Sainsbury’s, Asda, Aldi, Lidl and Morrisons all said they would pay their rates bills last year when the first 12-month tax holiday was introduced. 

A Sainsbury’s spokeswoman said today: ‘Despite significant ongoing costs associated with protecting colleagues and customers from COVID-19, we expect that the vast majority of Sainsbury’s stores will remain open this year. 

‘We will therefore forgo the business rates relief on all Sainsbury’s stores again this year. We will also forgo the business rates relief on all standalone Argos stores once they re-open.’ 

Non-essential shops and hospitality venues have been particularly heavily hit by the impact of the pandemic and remain shut in the face of the nationwide lockdown.

Retail, hospitality and leisure firms will now see the current business rates holiday – which was due to expire at the end of this month – extended until the end of June, when restrictions are intended to be wound down.

Mr Sunak said: ‘This year, we’ll continue with the 100% business rates holiday for the first three months of the year – in other words, through to the end of June.

Tesco expected to hand back around £585million it saved during the business rate holiday last year - with further savings expected in the first three months of the next financial year

Tesco expected to hand back around £585million it saved during the business rate holiday last year – with further savings expected in the first three months of the next financial year 

‘For the remaining nine months of the year, business rates will still be discounted by two-thirds, up to a value of £2million for closed businesses, with a lower cap for those who have been able to stay open.’

The business rates holiday for the current financial year has cost around £11billion, although more than £2billion was handed back to the Treasury by supermarkets and other essential retailers which have traded throughout lockdown measures. 

Mr Sunak also told MPs that the current temporary 5% rate of VAT on food and soft drinks, hotel accommodation and leisure attractions will be extended until September 30.

The Chancellor added: ‘We’ll have an interim rate of 12.5% for another six months, not returning to the standard rate until April next year.

‘In total, we’re cutting VAT next year by almost £5 billion.’

Supermarket Morrisons has said it will pay its business rates bill in full, while the Co-op is said to be considering the move

Supermarket Morrisons has said it will pay its business rates bill in full, while the Co-op is said to be considering the move

Alcohol duty will also be frozen for the second year in a row, although this fell short of calls from hospitality leaders to cut beer and spirits duties.

High street and hospitality firms are also set to benefit from a £5 billion grant scheme designed to aid the recovery of these sectors following the heavy impact of the pandemic.

The Chancellor said the grants would be worth as much as £18,000 per firm and will help them through the easing of lockdown measures.

Hospitality companies will be able to claim up to this maximum, with non-essential retailers limited to £6,000 through the scheme to reflect their early reopening date.