UK supermarkets and grocers are set to benefit from a tax cut of around £550 million over the next three years, according to new analysis.
The move comes as over half a million retail properties in England and Wales were revalued as part of the a shake-up to the business rates system of property taxes.
As a result, supermarkets will benefit from a roughly 10% decrease in their values as a result of the changes, according to analysis of official government data by commercial property advisory firm Altus Group.
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New rateable values will now be based on data from 2021 after criticism from companies, including Big 4 grocer Tesco, that previous values “were out of date”.
Now, larger supermarkets will see their rateable values drop from £2.86 billion to £2.43 billion this year.
According to the research, grocers will save around £218.64 million in 2023 on their largest format stores as a result, however, smaller supermarkets and convenience stores have seen an increase to their valuations.
These stores saw valuation increases, which would increase the tax burden by around £140.76 million over the next three years.
“This was a market correction within the sector,” Altus UK president Robert Hayton said.
“The biggest surprise is the modest reduction overall for over 400,000 ordinary shops which is difficult to square with the collapse in demand for new leases around the valuation date and the immediate aftermath of pandemic restrictions.”
As a result, grocers and supermarkets in the UK will see a total drop in their bills of £546 million over the next three years across all types of shops.