The bosses of Britain’s largest supermarkets have urged the Chancellor to exempt retailers from a new business rates surtax, warning that shoppers could face higher food prices as a result.
A letter coordinated by the British Retail Consortium (BRC) and addressed to Rachel Reeves stresses that limiting the tax burden on grocers is essential to help curb rising food inflation.
Signatories include executives from Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons, and Waitrose.
The BRC expressed concern that large supermarkets could see their business rates rise under the Government’s proposed surtax on properties with a rateable value above £500,000. Smaller high-street firms, by contrast, would benefit from reduced business rates.
The plans are expected to be confirmed in next month’s autumn Budget and would take effect from April 2026.
The letter warns that supermarkets’ “ability to absorb additional costs is diminishing.” It adds:
“If the industry faces higher taxes in the coming Budget – such as being included in the new surtax on business rates – our ability to deliver value for our customers will become even more challenging and it will be households who inevitably feel the impact.
“Given the costs currently falling on the industry, including from the last budget, high food inflation is likely to persist into 2026. This is not something that we would want to see prolonged by any measure in the Budget.
“Large retail premises are a tiny proportion of all stores, yet account for a third of retail’s total business rates bill meaning another significant rise could push food inflation even higher.”
The supermarket chiefs concluded by urging Ms Reeves to “address retail’s disproportionate tax burden,” saying it would “send a strong signal of support for the industry and of the Government’s commitment to tackling food inflation.”
Helen Dickinson, chief executive of the BRC, said: “Supermarkets are doing everything possible to keep food prices affordable, but it’s an uphill battle, with over £7 billion in additional costs in 2025 alone. From higher national insurance contributions to new packaging taxes, the financial strain on the industry is immense.”
The Treasury has been approached for comment.
