Sainsbury's follows rivals in paying business rates during pandemic

British supermarket group Sainsbury's has followed market leader Tesco and Morrisons in deciding to forgo relief on business rates on its stores during the COVID-19 pandemic.

The group said on Thursday it would now pay 410 million pounds of business rates in its year to March 2021 and 30 million pounds in the following year.

In March, the government and Britain's devolved administrations exempted all retailers from paying the tax on their store networks for the 2020/21 financial year to help them get through the crisis.

The supermarket groups, which have performed well during the pandemic, have been criticised by lawmakers and media for paying shareholder dividends while receiving taxpayer money in the form of property tax relief.

However, on Wednesday, Tesco said it would repay the 585 million pounds it has claimed because some of the risks of the crisis were now behind it, and returning the money was "the right thing to do."

That stance put pressure on rivals to do the same.

Morrisons soon followed and on Thursday Sainsbury's said it had also had a change of heart.

"Sainsbury's sales and profits have been stronger than originally expected... and we have therefore taken the decision to forego the business rates relief on all Sainsbury's stores," it said.

Taking account of the business rates it will now pay, the group forecast underlying pretax profit of at least 270 million pounds in its 2020-21 year.

Sainsbury's continues to expect underlying pretax profit in 2021-22 to exceed the 586 million pounds made in 2019-20.

It said the board will prioritise payment of dividends to shareholders over net debt reduction in 2020-21.

This will push back its target of at least 750 million pounds of net debt reduction in the three years to March 2022. It now expects to achieve the target by March 2023.