More UK supermarkets waive tax relief
Sainsbury’s, Asda, Aldi and B&M will forgo UK property tax relief during the pandemic, following rivals Tesco and Morrisons and taking the total recouped by the UK government from retailers to £1.8 billion.
Britain’s supermarket groups have seen sales soar during the pandemic, but have been criticised by politicians for paying shareholder dividends while receiving tax relief.
Sainsbury’s said it would now pay £440m of so-called business rates, while Walmart owned Asda will pay £340m and German-owned Aldi will pay £100m.
Discounter B&M later said it would forego business rates relief worth around £80m in its current financial year.
The British government and devolved administrations in March exempted all retailers from paying the tax on their stores for the 2020/21 financial year to help them through the crisis.
However on Wednesday, market leader Tesco said it would repay the £585m it had claimed because some of the risks of the crisis were now behind it, and returning the money was “the right thing to do”.
That stance put pressure on rivals to do the same and Morrisons followed, saying it would pay £274m.
Sainsbury’s said it had performed ahead of expectations, particularly since the start of the second national lockdown in England last month.
“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,” CEO Simon Roberts said.
Asda CEO Roger Burnley said the group recognised there were other industries for whom the effects of Covid-19 would be much more long lasting.
Tesco CEO Ken Murphy denied its decision to pay was a calculated one to damage competitors who do not share its financial strength.
“When we made the decision, we didn’t really think about the competition at all,” he told Sky News.
Ken Murphy also said the move was unconnected to Tesco’s plan to pay shareholders a £5 billion special dividend when the sale of its Asian business was completed.
The Co-operative Group said it plans to review its position at end of the year, while discounter Lidl declined to comment.
M&S and Waitrose owner, the John Lewis Partnership, have said they will not forgo it.
Both groups sell a broader range of products including clothing and homewares.
A spokesman for British Prime Minister Boris Johnson told reporters the government welcomed any decision to repay support “where it is no longer needed”.
Taking account of the business rates it will now pay, Sainsbury’s forecast underlying pretax profit of at least £270m in its 2020-21 year, and over £586m in 2021-22.
It said it will prioritise dividend payments to shareholders over cutting debt in 2020-21, which will push back its timetable for debt reduction.