Pets at Home and B&M said they would both hand millions of pounds to the exchequer, voluntarily paying the business rates they avoided during the pandemic. The announcement follows similar decisions from supermarkets earlier this week.
The move means retail businesses have so far pledged to give almost £1.8bn ($2.4bn) to the UK government this week alone.
B&M said on Thursday afternoon it was “now right to forego the business rates relief,” which it said totalled around £80m. Pets at Home followed on Friday morning, saying it would return £28.9m to the government.
“We were very grateful for the rates relief provided back in March during a time of significant uncertainty, which helped us to take the decision to keep our stores, online operations and veterinary practices open,” said Pets at Home chief executive Peter Pritchard.
“Recent positive news around the launch of vaccinations for COVID-19 has led us to reassess the level of uncertainty ahead.”
The government announced at the start of the pandemic that retailers would be temporarily exempt from business rates, a form of tax charged on buildings used for corporate purposes. The tax break saved retailers millions on their stores.
In recent weeks, the supermarket sector drew criticism for accepting the tax break while at the same time paying out millions in dividends to shareholders. Supermarkets were allowed to stay open throughout lockdowns and sales have surged.
Supermarkets initially rebuffed calls for them to forgo the tax relief but Tesco (TSCO.L) broke ranks on Wednesday and announced it would hand over half a billion pound in business rate relief. The move prompted rivals Sainsbury’s (SBRY.L), Aldi, Asda, and Morrisons (MRW.L) to all pledge similar repayments.
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While the moves are likely to be popular with the public, industry insiders said the move highlighted the need for fundamental reform to the tax system.
Retailers complain that business rates put them at a disadvantage to online-only retailers who pay much lower rates due to their lack of stores. Submissions to parliament last year showed business rates paid by Amazon (AMZN) accounted for less than 1% of UK sales, compared to 2.5% for Next (NXT.L) and 1.8% for Marks & Spencer (MKS.L).
“The taxation of retailing in the is now fundamentally broken, unfair and unethical,” Greg Lawless and Clive Black, retail analysts at Shore Capital, wrote in a note on Friday. Lawless and Black have argued retailers should not forgo the tax break.
B&M’s chief executive Simon Arora said the system needed a rethink, even as he announced his company would voluntarily submit to a higher tax bill.
“We request urgent reform of the outdated business rates system that is contributing to job losses across the retail sector and is acting as a deterrent to B&M and other potential occupiers taking up vacant space in many locations,” Arora said in a statement.
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