Over 100 large UK supermarkets could face closure as incoming business rates reforms are set to push operating costs sharply higher from April 2026. Major chains including Tesco, Sainsbury’s, Morrisons, and Asda warn that the changes could make dozens of stores unprofitable, potentially reshaping Britain’s retail landscape.
Background: What Are Business Rates and Why Are They Changing?
Business rates are a property tax charged on commercial premises in England, Scotland, and Wales. They’re calculated based on the “rateable value” of a property — essentially its estimated rental value — multiplied by a set “multiplier” determined by the government.
In June 2025, the UK government announced its Business Rates Forward Look policy, designed to create a more balanced tax structure for the retail, hospitality, and leisure sectors. From April 2026, properties with a rateable value under £500,000 will benefit from lower, permanent multipliers, while larger premises will face higher tax rates.
While the move is intended to support small high street shops, it has sparked backlash from large retailers, particularly supermarket chains, whose large-format stores almost all exceed the £500,000 threshold.
Who Will Benefit Under the New Rules?
The winners are smaller, independent retailers, many of which have struggled to compete with bigger chains and online giants.
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Shops under £500,000 rateable value will see a permanent reduction in their business rates, allowing them to reinvest in premises, hire more staff, and weather economic pressures.
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Small cafés, local pubs, and family-run stores in high streets are expected to gain the most from the changes.
By contrast, large supermarkets, shopping centre anchor stores, and out-of-town retail parks will see significant tax hikes, with the proceeds funding the relief for smaller firms.
If the government’s business rates reforms go ahead as planned, large supermarkets will face a permanent cost increase, putting more than 100 stores at risk of closure and potentially raising prices for millions of UK shoppers.
Why the Change Was Made
The government argues that high street revival requires targeted tax relief for smaller businesses that act as community hubs.
Treasury officials claim:
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The reform will level the playing field between small independents and corporate giants.
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Larger retailers have greater financial resilience to absorb the extra costs.
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The higher rates on big stores will raise revenue to support smaller high street outlets, creating a fairer system.
However, supermarkets argue this view ignores the role they play as anchor tenants, driving foot traffic that benefits nearby smaller businesses.
How the New Business Rates Will Work
The changes coming in April 2026 are straightforward in theory but highly impactful:
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Lower multiplier: For properties below £500,000 rateable value.
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Higher multiplier: For properties above £500,000, which includes most large supermarkets and department stores.
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The multiplier increase for large premises will be permanent, not a one-off.
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The government estimates that fewer than 1% of all retail properties will face higher rates — but this small group includes almost every large supermarket in the UK.
Industry analysts estimate:
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£600 million per year in additional taxes across large retailers.
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Around £350 million of that burden will fall on the grocery sector alone.
Impact on the Public and the Retail Landscape
Supermarkets warn that the reforms could have serious consequences for consumers:
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Store closures:
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Sainsbury’s: 50 stores at risk.
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Tesco: “Tens” of stores could close.
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Morrisons: Around 30 of 500 stores vulnerable.
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Asda: Nearly 90% of stores above the threshold.
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Higher prices: Retailers suggest the increased costs may be passed on to shoppers in the form of price hikes, especially on essential goods.
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Reduced choice: Communities could lose access to large, full-service supermarkets, particularly in less densely populated areas.
Discount chains like Aldi and Lidl will be largely unaffected — less than 10% of Lidl’s stores exceed the threshold — potentially giving them a competitive advantage.
Political and Economic Considerations
Economically, the move aims to redistribute the tax burden, but politically it risks a high street backlash:
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Supporters argue it will help revive small towns and local shopping districts.
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Critics call it an anti-growth measure, penalising retailers who invest in large-format stores.
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Food inflation could tick upward if the costs filter through to prices, which could become a political headache for the government.
Retail groups like the British Retail Consortium have warned that the timing — amid ongoing cost-of-living pressures — could exacerbate economic inequality.
Reactions from Industry Stakeholders
Ken Murphy, CEO of Tesco:
“Large supermarkets are not the enemy of the high street — they are its anchor. Increase our burden and you risk hollowing out town centres.”
Simon Roberts, CEO of Sainsbury’s:
“We support fairer taxation, but this policy risks pulling investment away from local communities.”
British Retail Consortium:
“Business rates reform must not become a tax raid on the very businesses that underpin local economies.” Source AI Gen.
How Retailers Can Respond
While there’s no “application” for relief if you’re above the £500,000 threshold, supermarkets may adapt by:
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Downsizing store footprints to fall below the threshold.
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Converting parts of large stores into separate, smaller units leased to other businesses.
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Lobbying for transitional relief or phased implementation.
Possible Challenges Ahead
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Consumer pushback if prices rise or stores close.
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Union concerns over potential job losses in affected supermarkets.
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Local council worries about empty retail units hurting community footfall.
Public Response So Far
Social media has lit up with debate:
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Some shoppers welcome the support for small businesses.
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Others worry about losing access to their nearest large-format store.
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Many call for online giants like Amazon to face similar tax scrutiny.
What to Expect Next
The final business rates multiplier figures will be confirmed in the 2025 Autumn Statement. Retailers are expected to intensify lobbying efforts in the coming months. If no changes are made, April 2026 could see the start of a major reshaping of the UK supermarket landscape.
Key Takeaway
If the government’s business rates reforms go ahead as planned, large supermarkets will face a permanent cost increase, putting more than 100 stores at risk of closure and potentially raising prices for millions of UK shoppers.