Sainsbury’s, Asda and Aldi to hand back £880m of business rates relief to the government

Supermarkets to hand back tax break after lockdown boosts sales and profits

Ben Chapman@b_c_chapman
Thursday 03 December 2020 16:47
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<p>The decisions put pressure on other supermarket chains to make similar commitments</p>

The decisions put pressure on other supermarket chains to make similar commitments

Supermarkets will hand £1.7bn to the government after Aldi, Sainsbury’s, Asda and Morrisons followed Tesco in pledging to return savings they’ve made through business rates relief during the pandemic.  

Discount chain Aldi announced on Thursday that it would hand over around £100m, while Sainsbury’s said it would pay £440m, Asda £340m and Morrisons £274m.

Tesco said a day earlier that it would hand over the £585m benefit it has received through the tax break, which was designed to help struggling businesses.

The decisions put pressure on other supermarket chains to make similar commitments. 

Supermarkets have enjoyed strong sales and profits this year as they have been able to trade while other non-essential shops and restaurants have been closed.

Aldi’s UK chief executive, Giles Hurley, paid tribute to staff for enabling stores to operate during lockdowns and said that returning business rates relief was the right decision to help support the nation.

Sainsbury’s boss Simon Roberts urged the government to overhaul the business rates system to “level the playing field” between physical and online retailers.

Because the tax is charged on estimated property values, online retailers who have fewer sites in cheaper, out-of-town locations pay much less, a factor that critics say gives them an unfair advantage and contributes to the decline of high streets.

Sainsbury’s said it spent £290m on making the business Covid-safe in the first half of the year – more than the £230m it received in rates relief. However, lockdown measures continued longer than expected resulting in stronger-than-expected sales and profits.  

Mr Roberts said essential retailers had benefited from being open throughout the pandemic.

“With regional restrictions likely to remain in place for some time, we believe it is now fair and right to forgo the business rates relief that we have been given on all Sainsbury’s stores,” he said.

Rishi Sunak announced in March that thousands of retailers and hospitality businesses would not have to pay business rates for the 2021-22 financial year.

Co-op said it had spent more money on becoming Covid-safe than it had saved through rates relief but would reconsider the situation at the end of the year.

A spokesperson for Waitrose owner the John Lewis Partnership said: “We are incredibly grateful for this vital support because we have lost significant sales while our John Lewis shops have been closed and have invested heavily to keep our partners and customers safe.

“The outlook remains incredibly uncertain and government support remains crucial to help us navigate the crisis.

“We’re a business owned by our employees – our partners, not external shareholders – and we don’t intend to pay a bonus this year.

“Whenever we make any money, it is invested in our partners, our business and charitable giving.”

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