Tesco Extra

The annual business rates bill for the traditional big four supermarkets will increase by £136m from April, according to calculations by Colliers.

The bill for the ‘big six’, including Aldi and Lidl, will rise by £159m, according to the commercial property consultancy.

The increase is the result of a three-year freeze in the business rates multiplier – used to calculate the tax bill – coming to an end.

Chancellor Jeremy Hunt confirmed in last month’s autumn statement that the freeze would continue for small businesses whose property has a rateable rental value below £51,000, but not for larger ones.

It means the tax is set to rise for larger businesses in line with September’s high inflation figure of 6.7%.

Hunt’s move to end the freeze has been met with repeated warnings from retail of the negative impact on a sector already under pressure.

BRC Helen Dickinson warned in November it could stall progress on grocery price inflation, coming alongside a 9.8% rise in the national living wage to £11.44.

Retailers “face new headwinds in 2024 – from government-imposed increases in business rates bills, to the hidden costs of complying with new regulations”, Dickinson said.

“Combining these with the biggest rise to the national living wage on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food.”

Colliers head of business rates John Webber said: “Given the size of the increase next April it is inconceivable that this third-biggest outgoing after wages and rent will not find its way into the shopping baskets of shoppers throughout the country.

“Food is not a luxury item, it is a necessity.”

The multiplier for larger retailers is set to rise from 51.2p for every £1 of rateable property value to 54.6p.

Around 34p would be a more sustainable rate, according to Webber.

“Nowhere else in Europe do businesses pay approaching 60% the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses,” he said.

Analysis by commercial real estate intelligence firm Altus Group this week put UK property tax at the highest level in the developed world, with a tax to gross domestic product ratio of 4%, equalled only by Israel.