Sainsbury’s, Aldi and Asda to repay £900m business rates relief
Sainsbury’s, Aldi and Asda will hand back almost £900m in business rates relief after Tesco and Morrisons announced plans to repay almost £1bn of Covid tax breaks on Wednesday.
Sainsbury’s said it had been contemplating forgoing the Government’s rates holiday “since the announcement of a second national lockdown in England”, but analysts warned the move by Tesco would pressure rivals to follow suit.
The FTSE 100 grocer will hand back £410m worth of rates relief this year and will not take up the £30m offered next year, it said. Sainsbury's has decided to retain £40m relief on Argos stores.
Following the announcements by its rivals, Aldi said on Thursday that it would repay £100m and Asda said it would repay rates relief of £340m.
Chief executive Roger Burnley said: "We recognise that there are other industries and businesses for whom the effects of Covid-19 will be much more long lasting and whose survival is essential to thousands of jobs. We will therefore be discussing with the Government and devolved authorities the best mechanism to ensure the relief we have received can go towards helping those that need it most."
Supermarkets have faced months of criticism for claiming business rates relief offered to all retailers to help them survive lockdown, as industry insiders raised concerns over a possible windfall tax on profits made during the crisis.
Unlike almost all the rest of the industry, the grocers were allowed to stay open and enjoyed bumper sales.
Sainsbury’s chief executive Simon Roberts said: “While we have incurred significant costs in keeping colleagues and customers safe, food and other essential retailers have benefited from being able to 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.
“We are very mindful that non-essential retailers and many other businesses have been forced to close again in the second lockdown and we hope that this goes some way towards helping them.”
Shares in Sainsbury’s rose 2.5pc on Thursday.
On Wednesday morning, Tesco announced it would repay £585m of relief, catching rivals by surprise. Morrisons then responded after markets closed by pledging to hand back £274m. Its shares fell 0.6pc on Thursday.
The cash returned by both supermarkets is roughly equivalent to the cost of Rishi Sunak’s Eat Out to Help Out scheme that ran during August.
The moves by Sainsbury’s, Asda and Aldi brings the total waived by grocers in the last 24 hours to about £1.7bn.
While supermarkets were allowed to trade throughout lockdown, Waitrose owner John Lewis and Marks & Spencer were both forced to shut parts of their operations and have already said they will not repay the business rates relief.
Lidl and Iceland declined to comment, while Co-op said it would consider its approach but was unlikely to pay the money back.
The 12-month rates relief holiday was introduced at the start of the pandemic by the Government to ease the financial pressure on retailers after hundreds of thousands of stores were forced to shut. It comes to an end in March.
