Key facts
- Retailers are calling for reform of the UK's business rates system ahead of the October 28 Budget.
- M&S CEO Stuart Machin stated the retail sector pays a disproportionate share of business rates.
- John Lewis boss Jason Tarry warned against a 'warehouse tax' that could harm anchor retailers.
- Tesco CEO Ken Murphy criticized the business rates system as 'fundamentally unfair'.
- Tesco upgraded its full-year profit guidance to £3.15bn-£3.3bn.
Retail leaders are urging the UK government to reform business rates ahead of the upcoming Budget, warning that the current tax structure places an unsustainable burden on the sector and could harm high street businesses.
Marks & Spencer chief executive Stuart Machin stated that while supporting high street businesses is important, taxing supermarkets to fund these breaks would increase costs for consumers. He argued that the retail sector, which represents 5% of the economy, pays over a fifth of all business rates, a situation he described as unsustainable.
John Lewis boss Jason Tarry cautioned against proposals to increase business rates on warehouses, which he believes would penalize major retailers that act as vital anchor tenants supporting surrounding independent shops. He advocated for a reform of the "archaic" business rates system and suggested tax-free shopping for foreign visitors.
Tesco chief executive Ken Murphy echoed these concerns, calling the business rates system "fundamentally unfair" and urging the government to exempt retailers from higher rates on large warehouses. He noted that retailers already pay significantly more than their fair share of property taxes.
These interventions come as Chancellor John Healey prepares to deliver his first Budget on October 28. The government is reportedly considering increasing taxes on large warehouses and out-of-town properties to fund tax breaks for smaller high street businesses. However, retailers argue that such measures could disproportionately affect them, as many operate extensive distribution networks to support their physical stores.
Separately, Machin called for the reversal of a reduction in the National Insurance threshold, which he said has hit retailers and their suppliers hard. He noted that M&S faced £150 million in new annual costs on top of a half-billion-pound tax bill due to previous budgets.