Major UK supermarket chains and industry bodies urge the Chancellor to exclude large grocery stores from a new business rates surtax, warning that it risks further pushing up food prices amid mounting operational costs and economic pressures.
UK supermarket leaders have united in a plea to the Chancellor, Rachel Reeves, urging her to exclude large grocery stores from a new business rates surtax planned for the next fiscal year. Organised by the British Retail Consortium (BRC), the collective letter warns that including supermarkets in this tax hike could exacerbate food inflation, ultimately passed on to consumers already grappling with rising living costs.
The proposed surtax targets commercial properties with a rateable value exceeding £500,000 and is designed to finance permanent business rates discounts for smaller high-street retailers and hospitality firms. However, the BRC highlights that large retail premises account for just a small fraction of stores but bear approximately a third of the sector’s total business rates bill. The consortium emphasises that an additional significant rise in these costs could push food inflation even higher, at a time when supermarkets are already under immense financial strain.
Industry executives from major chains including Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons, and Waitrose have collectively voiced concerns that their capacity to absorb further costs is “diminishing.” The letter states that if more taxes are imposed, particularly through the new surtax, the industry’s ability to maintain competitive pricing will be severely challenged, with households eventually facing the consequences.
Helen Dickinson, chief executive of the BRC, corroborates these concerns, noting that supermarkets face more than £7 billion in additional costs projected for 2025 alone. These encompass increased employer National Insurance contributions, rises in the National Living Wage, new packaging taxes, and regulatory changes. The financial pressures have led many retailers to increase prices already; a BRC survey found that 85% of retailers had raised prices, with 65% planning further hikes, reflecting a wider trend of cost-push inflation in the sector.
Food price inflation is anticipated to remain elevated, with various forecasts suggesting increases in the range of 2.4% to nearly 5% in 2025. The Institute of Grocery Distribution (IGD) warns that many of the rising costs emanate not only from tax changes but also from post-Brexit import challenges adding to produce prices, and new packaging regulations. The IGD estimates that only around 20-40% of the additional costs can be absorbed by supermarkets, meaning the majority will fall on shoppers.
Compounding the situation, the BRC underscores the risk of a ripple effect on jobs and local economies if the surtax proceeds unchanged. A recent warning from the organisation suggested that up to 400 large stores might face closure, potentially leading to the loss of 100,000 jobs and depriving local councils of over £100 million in business rates revenue annually. These concerns come amid a broader environment of cautious retailer sentiment, with over half of surveyed finance chiefs expressing pessimism about future trading conditions due to inflation and rising operational costs.
The upcoming autumn Budget, expected to be announced next month, will clarify whether supermarkets will be included in this new surtax. The Treasury has yet to comment on these concerns publicly. Retailers hope that the government will recognise the disproportionate tax burden on large stores and amend its plans accordingly, signalling support to an industry critical both to employment and to managing household cost-of-living pressures.
In summary, UK supermarkets are at a crossroads where further tax burdens risk compounding inflationary pressures, threatening to push food prices upward at a time when consumers and the sector alike are already stretched. The government faces a delicate balancing act in its upcoming Budget to support small businesses without undermining the stability of larger retailers crucial for the national food supply chain.
📌 Reference Map:
- Paragraph 1 – [1] Irish News, [2] Independent
- Paragraph 2 – [1] Irish News, [2] Independent
- Paragraph 3 – [1] Irish News
- Paragraph 4 – [3] Reuters, [6] Independent
- Paragraph 5 – [4] Reuters, [6] Independent
- Paragraph 6 – [5] Reuters
- Paragraph 7 – [3] Reuters, [7] Independent
- Paragraph 8 – [1] Irish News, [2] Independent, [5] Reuters
Source: Noah Wire Services
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative is recent, published on October 26, 2025. Similar concerns have been raised in the past, such as in September 2025, when the British Retail Consortium (BRC) warned that a new surtax for large shops could lead to price rises for consumers. ([irishnews.com](https://www.irishnews.com/news/uk/tax-rises-would-lead-to-food-inflation-remaining-above-5-well-into-next-year-CAMPWERNCZMWHMRO6WAO6V55F4/?utm_source=openai)) However, the current report provides updated figures and quotes, indicating a higher freshness score.
Quotes check
Score:
9
Notes:
The direct quotes from the letter to Chancellor Rachel Reeves and BRC chief executive Helen Dickinson are unique to this report. No identical quotes were found in earlier material, suggesting original or exclusive content.
Source reliability
Score:
8
Notes:
The narrative originates from The Irish News, a reputable UK news outlet. The BRC, a well-established industry group, is cited as the source of the letter, adding credibility.
Plausability check
Score:
9
Notes:
The claims about the proposed surtax and its potential impact on food inflation are consistent with previous reports. For instance, Reuters reported in September 2025 that the BRC warned up to 400 large UK stores risk closure due to the proposed property tax hike. ([reuters.com](https://www.reuters.com/world/uk/up-400-large-uk-stores-risk-closure-property-tax-hike-says-brc-2025-09-11/?utm_source=openai)) The language and tone are appropriate for the topic and region, and the report includes specific factual anchors, such as the £500,000 rateable value threshold and the £7 billion in additional costs projected for 2025.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative is recent and provides updated information on the proposed business rates surtax and its potential impact on food inflation. The quotes are unique, and the source is reputable. The claims are consistent with previous reports, and the language and tone are appropriate.
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