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Pressure grows on Waitrose, M&S, Iceland, and Co-op to return COVID tax relief

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·4-min read
Embargoed to 0001 Monday August 31 File photo dated 11/09/08 of a Waitrose sign. The boss of Waitrose has said the upmarket grocer sees its split from delivery partner Ocado as a "big opportunity" as it looks to tempt customers on to its own platform.
A Waitrose supermarket sign. Photo: PA

Pressure is growing on some of Britain’s biggest supermarkets to return millions of pounds in COVID-19 tax relief.

Britain’s five biggest supermarkets have all pledged to return business rates relief granted by the government earlier this year. The commitments, made over the last few days, follow weeks of public pressure.

Lidl, the seventh biggest supermarket, joined the movement on Friday, pledging to return £100m ($135m) in taxes saved earlier in the year. The company’s UK CEO said it was “the right thing to do.”

But some of the UK’s biggest supermarket chains are still either holding out or refusing to hand back cash.

READ MORE: UK supermarkets 'do the right thing' repaying £1.7bn COVID-19 tax breaks

Waitrose, Marks & Spencer (MKS.L), Iceland, and Co-op have all either stayed silence or publicly said they won’t return cash.

Three of the four argue that the impact of COVID-19 on other parts of their business means they can’t afford to forgo rates relief.

A spokesperson for John Lewis Partnership, which owns Waitrose, said government support was “crucial to help us navigate the crisis.”

READ MORE: Tesco repays £585m business rate relief

“We're a business owned by our employees — our partners, not external shareholders — and we don't intend to pay a bonus this year,” a spokesperson said. “Whenever we make any money, it is invested in our partners, our business and charitable giving."

In July, John Lewis said it would close stores, cut staff, and scrap employee bonuses in response to diving sales.

The department store has been forced to close its retail locations for months at a time in 2020 and fell to a £635m loss earlier this year. It is understood the John Lewis Partnership saved around £50m through business rates relief.

Watch: Why can't governments just print more money?

READ MORE: Lidl joins rivals in returning £100m COVID tax break

Similarly, Co-op said the impact of the pandemic meant it could not afford to give money to the government. It didn’t rule out repayment but made clear it would be unlikely.

“We’ve clearly put the interests of people before profits and the extra costs for keeping our colleagues and customers safe have far outweighed the government support we’ve received, in respect of business rates and furlough payments,” a spokesperson said.

“Given the huge uncertainty we’re facing into still and the ongoing costs we are incurring, we’ll consider our approach in terms of the government support we’ve received at year-end.”

Like Waitrose, Co-op is part of a broader conglomerate. Its parent company does everything from funerals to insurance and other parts of the business have suffered during the pandemic.

READ MORE: John Lewis axes staff bonus as it slides to £635m loss

Marks & Spencer (MKS.L) pointed to the devastating impact of COVID-19 on its retail business, which offset gains in its chain of food shops. Earlier this year M&S announced its first loss in almost 100 years as a result of the pandemic.

“We are very grateful for the much-needed support government has provided to businesses impacted by the pandemic — including ours,” a spokesperson said.

“It has enabled us to support our colleagues and our suppliers, whilst continuing to serve our customers in what have been incredibly challenging circumstances.”

Iceland has so far stayed silent on the issue of business rates. The supermarket did not respond to a request for comment.

READ MORE: Marks & Spencer falls to its first loss in almost 100 years

Pressure on the sector comes after Tesco (TSCO.L) on Wednesday said it would return over half a billion pound in rate relief.

“Clearly, Tesco’s decision will have a direct read across to the other British retailers that have remained open and received business rate relief in this challenging time,” analysts at Shore Capital wrote in a note earlier this week.

Since then, Morrisons (MRW.L), Sainsbury’s (SBRY.L), Aldi and Asda (WMT) have all followed in Tesco’s footsteps by pledging to repay cash to the government. Other retailers have followed the example too. Around £1.9bn in waived business rates relief has been announced this week alone.

Watch: Why tax rises may be inevitable in Britain