Overview
Bernstein analysts assess the implications of the UK Budget, announced on 28 October 2026, for major British retailers.
Business‑rate exposure
In financial year 2025/26 Tesco plc paid £736 million, J Sainsbury plc paid £425 million and Marks & Spencer Group plc paid about £180 million in business rates. Bernstein notes that business rates, calculated by applying a multiplier to a property’s assessed rental value, constitute one of the largest components of retailers’ tax bills, exceeding corporation tax.
Retailers’ lobbying position
Retailers are urging the Treasury to exempt retail properties from the highest business‑rate multiplier proposed in the Budget. The British Retail Consortium (BRC) is calling for a freeze of the inflation‑linked rise in business rates. M&S Chief Executive Stuart Machin highlighted that retail accounts for roughly 5 % of UK GDP yet bears more than one‑fifth of total business‑rate revenue.
Possible Budget outcomes (Bernstein scenarios)
1. No change – the existing multiplier structure remains unchanged.
2. Selective increase – a higher multiplier is applied only to non‑retail assets such as premium office space.
3. Full exemption (best case) – retail properties are removed from the top multiplier tier.
4. Higher top multiplier for all (worst case) – the highest multiplier is extended to all commercial properties, including retail.
National Insurance implications
Tesco and Sainsbury’s incurred employer National Insurance (NI) liabilities of £843 million and £316 million respectively in FY 2025/26. In April 2025 the NI threshold for employers was reduced from £9,100 to £5,000 and the employer rate increased from 13.8 % to 15 %, disproportionately affecting firms with large numbers of entry‑level or part‑time staff. The BRC proposes raising the threshold to £6,000; at the current 15 % rate this would reduce an employer’s NI cost by up to £150 per covered employee per year.
Government stance on NI exemption
The Financial Times reported that the government rejected proposals to exempt employers from NI contributions for workers under 25 years of age.
Consumer‑spending focus and additional measures
The Budget is expected to centre on stimulating consumer expenditure, as UK shoppers face pressure from rising fuel inflation and food prices. Bernstein cites possible supportive measures such as energy‑bill assistance, adjustments to income‑tax thresholds, a freeze on fuel duty, reversal of a planned freeze on the student‑loan repayment threshold, and schemes to aid first‑time home buyers. The retailer Next lowered its UK guidance for the second half of the year, and Sainsbury’s missed second‑quarter like‑for‑like sales, underscoring the heightened spending pressure.