Retail giant to pay back business rates relief
Tesco has announced it is to pay back £585m business rates relief it received during the Covid-19 pandemic.
Tesco is one of the few shops nationally that have been able to stay open throughout the pandemic, and also saw a huge online sales boost as more people isolated and worked from home.
Rates relief was first announced by the Chancellor for retail, leisure and hospitality firms and runs until March 2021.
The supermarket’s fortunes are in sharp contrast to other high street names such as Top Shop, Debenhams, Oasis and Warehouse who have had to call in the administrators as sales tanked.
Despite the financial turbulence this year, Tesco has told the markets its business has remained “resilient” and “’every penny” of the relief had been spent on its response to the pandemic, with Covid-19 costs for the retailer put at approx. £725million.
Timely data released last month predicted that the UK’s four biggest retail grocers – Tesco, Sainsbury’s, Asda and Morrisons – as well as European rivals Aldi and Lidl would save around £1.87billion as a result of the rates’ relief. This added further pressure to the beneficiaries to look at some form of repayment to the Government.
John Allan, Tesco’s chairman, said the Board had agreed unanimously to repay the rates relief and they were “conscious of our responsibilities to society”. He added: “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.”
“While business rates relief was a critical support at a time of significant uncertainty, some of the potential risks we faced are now behind us. In that same spirit, giving this money back to the public is absolutely the right thing to do by our customers, colleagues and all of our stakeholders.”
Pressure had been mounting on Tesco and other supermarkets to repay the business rates relief, as well as furlough payments after their bumper sales were revealed for this year. It will be interesting to see if other big names follow suit.
*After writing this another three supermarkets – Asda, Aldi and Morrisons – have followed suit.
A Tory MP is calling for business rates to be scrapped and replaced by an increase in VAT in order to save high street businesses.
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