Add thelocalreport.in As A Trusted Source
Supermarkets are also among those hit Budget In form of chancellor It has been confirmed they will face a jump in business rates, amid warnings the move could lead to higher food prices for shoppers.
Government A new business rate will introduce “surcharge tax”, which will mean many large commercial properties worth £500,000 or more will face a higher rate of property tax to help fund permanent discounts for smaller retailers, leisure and hospitality firms.
It marks an apparent U-turn after it was widely reported that supermarkets were expecting to be given higher levels of discounting after criticism from industry bosses.
mark and wig It was previously said that the proposals for additional tax would “encourage retailers to close large high street stores”.
The Treasury said the move is designed to “rebalance the business rates system” and help smaller retail and hospitality firms by imposing more tax on broad-shouldered online giants – online giants with large warehouses.
According to the Treasury, the permanently reduced tax rates for retail, hospitality and leisure properties are worth around £900 million a year and will benefit more than 750,000 properties in these sectors.
But it will hit sectors such as supermarket retailers hard, coming against the backdrop of rising costs for the sector earlier this year and already high food inflation for UK shoppers.
EY retail expert Silvia Rindon said the measures would “impact the retail landscape and influence consumer behavior for years to come”.
He added: “The proposed tiered business rates system provides welcome relief for smaller retailers, helping to ease cost pressures at a time when margins are tight.
“However, the additional burden placed on larger operators could make food bills more expensive for consumers – making high street vitality and consumer choice even more challenging.”
Erin Brooks, European retail and consumer lead at Alvarez & Marsal, cautioned about the implications that could cause supermarkets to rein in store expansion plans.
He said: “The Chancellor’s last-minute U-turn on business rates has placed further pressure on UK supermarkets, leaving grocers bearing a disproportionate burden of this tax.
“In addition to higher National Insurance from the last budget, the rise in the living wage and stubborn food inflation means costs continue to rise for supermarkets, where margins are already thin.
“Today’s news means grocers will be disrupted in the investment decisions they make to improve store assets, sustainability and modernize their operations.
“At a time when household budgets are also stretched, this change further reduces the scope for keeping prices low for consumers.”
Smaller shops also raise doubts about whether permanent low rates will provide meaningful support.
The Association of Convenience Stores (ACS) dismissed this as a “big disappointment”, saying the new business rates multiplier will be set just 5p lower than small business and regular multipliers, adding that it “fails to remove the remaining 40% relief on business rates that was first introduced during the pandemic”.
James Lowman, chief executive of the ACS, said: “The changes to the business rates system do not receive enough support and that is a huge disappointment.
“Small shops’ rates bills will increase in April, and many will see further increases as a result of the revaluation.”