UK supermarkets warn business rates rise could push up food inflation
Bosses of the UK’s biggest supermarkets are urging the Chancellor to exempt shops from a new business rates surtax, warning that shoppers will bear the brunt of higher costs.
A letter, organised by industry group the British Retail Consortium (BRC) and addressed to Rachel Reeves, argues that limiting the tax burden on grocers would help tackle food inflation.
It has been signed by UK executives and directors at Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons and Waitrose.
The BRC said it is concerned that large shops could see their business rates rise if they are included in the Government’s new surtax for properties with a rateable value over £500,000.
Discounts
This is expected to cover discounts for smaller high-street firms, which will be subject to reduced business rates under the Government’s plans.
The plans are set to be confirmed in next month’s autumn Budget statement and would come into effect from next April.
In the letter, the supermarket bosses say that their “ability to absorb additional costs is diminishing”.
It reads: “If the industry faces higher taxes in the coming Budget – such as being included in the new surtax on business rates – our ability to deliver value for our customers will become even more challenging and it will be households who inevitably feel the impact.
“Given the costs currently falling on the industry, including from the last budget, high food inflation is likely to persist into 2026.
“This is not something that we would want to see prolonged by any measure in the Budget.
“Large retail premises are a tiny proportion of all stores, yet account for a third of retail’s total business rates bill meaning another significant rise could push food inflation even higher.”
Tax burden
The letter concludes by asking Ms Reeves to “address retail’s disproportionate tax burden” which it said would “send a strong signal of support for the industry and of the Government’s commitment to tackling food inflation”.
Helen Dickinson, the BRC’s chief executive, said: “Supermarkets are doing everything possible to keep food prices affordable, but it’s an uphill battle, with over £7 billion in additional costs in 2025 alone.
“From higher national insurance contributions to new packaging taxes, the financial strain on the industry is immense.”
The Treasury has been contacted for comment.
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Someone has to pay for Brexit.
Tosh Business rates are based on rateable values which is the open market rental value of the property
The market always finds its own level .
To make supermarkets a special case would not only be unfair to other retailers it won’t bring down the price of food either
The saving would only be added to their profits
Do you hear them say we made x profits last year we are going to hand it back to s hoppers by way of price reductions.
It will be a day to remember if retailers ever bear the cost of government or any increases without passing it on to us. This move is not a hit on businesses but yet another guise of hitting the general public. The buck always stops with us. Businesses never suffer but they like to make it appear that they are suffering. They will probably profit from this by adding a little on for themselves as well.
That’s how it goes. One day the supermakets plead poverty and blame the government for them having to put up food prices, the next they announce another bumper profit, increasing dividends for shareholders (who are their main concern – not how much people are struggling to make ends meet). Squeeze us for every last penny – sounds cynical but undoubtedly totally true.
The government must think we are stupid. They slap increases on businesses knowing quite well that it will inevitably be passed on to us. If the government truly wanted to hit businesses they should say “not to be passed on to customers” but they stop short of saying that. The government and businesses are big buddies but pretend otherwise. Probably a majority of government members benefit from higher dividends. It’s a win win situation.
Slightly Mafia like behaviour to get together in concert and threaten to put prices up.