Retail shares rise after changes to commercial property tax
Finance minister Rachel Reeves said she would introduce permanently lower tax rates for over 750,000 retail, hospitality and leisure properties, paid for through higher rates on properties with rateable values worth £500,000 or more
Shares in Britain’s major retailers jumped on Wednesday after changes to commercial property tax, or business rates, announced in finance minister Rachel Reeves’ budget statement were not as bad as feared.
Reeves said she would introduce permanently lower tax rates for over 750,000 retail, hospitality and leisure properties, paid for through higher rates on properties with rateable values worth £500,000 or more.
She also introduced over £4.3 billion of support over the next three years for a property of any size seeing a large increase in its bill.
Major retailers, including industry leader Tesco had warned the government not to include their superstores in a top band of business rates. They argued the move could make some unprofitable and fuel still high inflation, particularly in food.
The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax, said Helen Dickinson, CEO of the British Retail Consortium, which represents the UK’s major retailers.
She added: Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.
She called the new surtax a “retrograde step” that would do little to mitigate the rising cost of food and essentials.
However, Simon Roberts, CEO of supermarket group Sainsbury’s welcomed the government’s decisions on business rates, saying that “industry concerns have been heard”.
Shares in Tesco, Britain’s biggest food retailer, closed up 1.9%, while Sainsbury’s, the number two player, closed up 1.6%.
Clothing and food retailer Marks & Spencer was up 4.5%, while Primark owner Associated British Foods and Next both closed up 1.4%.
Analysts at Jefferies said Reeves’ move was a small positive for some retailers but could present a cost headwind for others, such as supermarkets, department stores, and those with flagship locations. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.