Tesco to save over £100m in the next five years after cut in business rates

Supermarket powerhouse Tesco will receive another boost with a £105m ($131.8m) cut in business rates taxes for its biggest stores – a move that could help it save £100m over the next five years.

The grocery giants recently announced profits of more than £1bn and will soon see its tax bill drop by £13m from £450m to £437m for some of its stores. Mark Rigby, the chief executive for business rates specialists CVS, believes Tesco will be able to benefit from the new revaluations.

Rigby said: "Over the next five years, allowing for transitional relief which limits how quickly bills can rise and fall, with increases through inflation, CVS projects Tesco will save £105.32 million in rates under the revaluation for its largest stores.

"In comparison, across England and Wales small shops have seen their rateable values, used to determine bills, increase by 8.5% whilst pubs have seen a 14.36% hike."

A spokesman for Tesco maintained that the company were still having to pay high rates despite the revaluation and called for an "urgent reform" of the existing system.

"Tesco is one of the UK's largest rate payers, paying almost £700m in rates in 2016-2017, and the 2017 revaluation will not alter that trend.

"Tesco has a significant physical presence across high streets and town centres, and fixed costs such as business rates are placing huge pressure on our operations. The current rates system is unsustainable and needs urgent reform."

Small businesses are facing increases of business rates of up to 50%,. Communities Secretary Sajid Javid is set to be quizzed on the the sudden increase in the tax by MPs.

Javid is under pressure after accusations he submitted a report of business rates increases to MPs that were different to the ones faced in reality.

Prime Minister Theresa May has promised those smaller companies that she will ensure they are given "relief", having spoken to Chancellor Philip Hammond and Javid.