Friday, September 22, 2017

Tesco in line to save £105m from new business rates

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Tesco deliveries

Tesco is poised to save £105 million thanks to lower business rates cuts on its biggest stores over the next five years, while small retailers face major hikes.

A study by rents and rates specialist CVS found also that business rates values for 563 of Tesco’s largest stores in England and Wales have dropped by £77.7 million overall.

Based on property assessment in 2010, these large stores had a combined rateable value of £903.47 million, which formed the basis of rates bills for the last seven years, but this has fallen by 8.6 per cent to £825.78 million.

According to Press Association, the CVS said the government’s revaluation will see Tesco’s bill for its largest stores in England and Wales fall by £13 million this year alone, from £450 million to £437 million.

CVS estimates this could mean Tesco would save at least £100 million over the next five years.


READ MORE: Tesco profits skyrocket as sales grow for first time since 2010


The revelation comes days after the UK’s biggest retailer reported profits of over £1 billion and as Communities Secretary Sajid Javid prepares to be grilled by fellow MPs over the controversial business rates reforms that came into effect at the start of this month.

“Over the next five years, allowing for transitional relief which limits how quickly bills can rise and fall, with increases through inflation, CVS projects Tesco will save £105.32 million in rates under the revaluation for its largest stores,” CVS chief executive Mark Rigby said in a statement.

“In comparison, across England and Wales small shops have seen their rateable values, used to determine bills, increase by 8.5 per cent whilst pubs have seen a 14.36 per cent hike.”

Smaller retailers are facing crippling business rates rises, with some expected to increase by more than half.


READ MORE: Business Rates: the Good, the Bad & the Ugly


However, Tesco said CVS’ estimates were “inaccurate”, but did not reveal how much their largest stores would save under the new business rates.

“Tesco is one of the UK’s largest rate payers, paying almost £700 million in rates in 2016-2017, and the 2017 revaluation will not alter that trend,” a Tesco spokesman for said.

“Tesco has a significant physical presence across high streets and town centres, and fixed costs such as business rates are placing huge pressure on our operations.

“The current rates system is unsustainable and needs urgent reform.”

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