Major UK supermarkets are preparing for a significant financial blow after the Treasury performed a surprise U-turn on business rates reform just ahead of the Autumn Budget.
Policy Reversal Hits Large Retailers
Officials have informed retail giants that premises with a rateable value exceeding £500,000 will now face a higher tax rate. This decision impacts a large proportion of stores across the country, including those operated by Aldi, Lidl, Tesco, and Asda.
The reversal comes as a particular shock to retail executives, who had received assurances as recently as October that larger shops would be exempt from the planned increases. The Treasury has declined to comment on this policy change, reported by GB News.
Broken Promises and Mounting Costs
This U-turn follows a period of optimistic dialogue between the government and industry leaders. In October, Lidl GB chief executive Ryan McDonnell stated that discussions with the government had been "quite productive" and expressed hope that "the government will see sense."
Similarly, M&S chief executive Stuart Machin voiced a hopeful sentiment last month, believing his points had been "discussed and received." This meeting occurred alongside indications from the Treasury that retail might be exempt from the planned business rates hikes.
Industry Warnings and Potential Fallout
The heads of nine supermarkets had previously written a joint letter to Chancellor Rachel Reeves, warning that higher taxes would challenge their ability to deliver value. They stated unequivocally: "it will be households who inevitably feel the impact."
The British Retail Consortium (BRC) has issued a stark alert, claiming that up to 400 shops could be forced to close if the hikes proceed. BRC chief executive Helen Dickinson emphasised their position: "We have been crystal clear with our ask. Give smaller retailers permanent discounts but not at the expense of larger retailers."
The new policy will see up to 10p added to the tax multiplier for properties worth over £500,000. The revenue generated is expected to fund discounts of up to 20p for smaller retail, hospitality, and leisure premises, creating a direct transfer of the tax burden from small businesses to large retail chains.
