Repaying business rates

In March, the Government announced a business rates holiday to help retailers cope with the loss of trade during the pandemic.

But some retailers have done pretty well this year.

Tesco’s decision to pay back £585m was quickly followed by other supermarkets – Asda (£340m), Morrisons (£274m), Sainsbury’s (£440m) with Aldi and Lidl repaying £100m or more each.

Other retailers repaying business rates include B&M (£80m which caused a small drop in its share price) and Pets at Home (£29m). Now the Kingfisher Group, owners of B&Q have added their name to the list, amounting to another £130m.

Wholefoods, which is owned by Amazon is repaying £2m.

In total, over £2bn of business rates is heading back into the Government’s coffers as well as £500m of furlough payments which were not needed.

But not all businesses have been so public spirited. MPs have urged bookmakers to also repay business rates, as online gambling has increased during the pandemic.

GVC which owns a number of betting companies including Ladbrokes Coral has refused to repay business rates or cash it received through the furlough scheme. The company has seen its share price triple and revenue rise by about one quarter.

Companies that have benefited during lockdown that have either said that they will not repay business rates or have remained silent include Waitrose, the Co-Op, M&S and Iceland.

Business rates

The rating system can be traced back to Tudor times, but the current framework for businesses was introduced in the Local Government Finance Act of 1988. It was a controversial period when the Government was trying to introduce the Community Charge (dubbed the Poll Tax). The new charge was proving to be difficult to collect and changes included a VAT rise and changes to business rates. This was intended to soften the blow of the Poll Tax to poorer families.

Business rates are collected by Local Authorities and were originally paid to the Government in full. Local Authorities are now entitled to keep some of the money collected.

In total, business rates amount to £23bn a year, 3 ½% of UK taxes and has a high collection rate at 98%.