Rates saving of £105m for Tesco as pubs see increases

By Liam Coleman

- Last updated on GMT

Rates: pubs pay 18p on a pint of beer in taxes, while supermarkets pay 4p for every pint
Rates: pubs pay 18p on a pint of beer in taxes, while supermarkets pay 4p for every pint

Related tags Business rates Value

Tesco is set for a substantial cut in business rates over the next five years, despite pubs across the country suffering a hike in rates.

Research from business rates specialists CVS shows that Tesco will have a business rates reduction of £105m over the next five years, despite the supermarket giant last week reporting profits of more than £1.2bn.

The analysis of Government data takes account of the rateable value of Tesco’s 563 largest stores. The combined rateable value of these properties was £903m in 2010, but this combined rateable value has dropped to £825m at the latest business rates revaluation.

Significantly lower rates

That means that since the beginning of April 2017, Tesco has been paying a significantly lower business rates bill than it has been paying for the past seven years.

CVS has analysed these figures and calculated that, once transitional relief has been taken into account, Tesco is set to save £105.32m on its business rates bill for those 563 largest stores over the next five years.

Tesco has rejected the figures, saying they are “inaccurate”, but the retailer declined to say how much the company’s largest stores are saving as a result of the latest revaluation.

‘Economically ruinous’

The Association of Licensed Multiple Retailers (ALMR) said that the research represented further evidence of the need for business rates reform.

ALMR chief executive Kate Nicholls said it would be a “huge shame, not to mention economically ruinous”, if pubs were to be put out of business by increased rates.

“Pubs and restaurants are no less important economically than giant supermarkets, and they play an important cultural role,” Nicholls added.

A different calculation

Pubs are unique in that business rates for boozers are calculated differently to other businesses; as well as site value, the calculations also take account of trading potential for pubs.

This coupled with the fact that research shows that pubs are on average seeing an increase in rateable values of 15% has intensified calls for reform.

Ahead of March’s Budget, British Beer & Pub Association (BBPA) chief executive Brigid Simmonds called​ for a “fundamental review”. She added that “pubs pay 2.7% of the entire [national] business rates bill yet generate only 0.5% of [national] business turnover”.

Wednesday grilling

Research has shown that 12,000 pubs will see a reduction in business rates, however, the Government did offer some respite for pubs with increasing rates. In March’s Budget,​ the Chancellor of the Exchequer Philip Hammond gave 90% of pubs a £1,000 discount in business rates.

Despite this, the Government remains under pressure to rethink business rates, with communities secretary Sajid Javid set to be questioned by MPs on business rates this Wednesday (19 April).

Related topics Legislation

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