The owner of B&Q has called on Rachel Reeves to reconsider planned tax increases for retailers before Wednesday’s spring statement, saying the industry is just as innovative on AI and robotics as US technology firms which could be handed tax cuts.
On the eve of the chancellor’s statement to parliament, Kingfisher, the owner of the DIY chain, said Reeves should reform the business rates system.
Thierry Garnier, the chief executive of Kingfisher, which runs DIY stores across Europe, said increases in employers’ national insurance contributions and packaging taxes would raise its costs in the UK by £45m this yearAn increase in the minimum wage from next month will add further costs.
He said Kingfisher, which also owns the Screwfix chain, expected to pay more on business rates from April 2026, when the government plans to increase the property tax for larger retail outlets.
Buildings with a rateable value of more than £500,000 could be poised to pay up to 20% more under the new rules which will reduce the burden on smaller retailers.
The changes were brought forward as a way to increase taxes for online retailers with large warehouses and offices, but are also expected to catch big retail sites, such as department stores and large out-of-town shops, as well as hospitals and factories, unless amendments suggested in the House of Lords last week are adopted by the government.
“We now have to face significant additional costs, like [other retailers],” he said. “We see the government is ready to cut some taxes for US tech companies in the UK and some of them are retailers. We hope to see proper reform on business rates and that is all the more necessary if some of our competitors will pay less tax.”
He said retailers were “tech companies investing in AI and innovation and need more support to be more innovative and employ more people”.
This week, Keir Starmer was warned against “appeasing” Donald Trump as he considers reducing a leading tax for US tech companies. Reeves confirmed there are “ongoing” discussions about the UK’s £1bn-a-year digital services tax that affects companies including Meta and Amazon.
Shares in Kingfisher dived more than 14% on Tuesday as it said profits could fall in the year ahead and were poised to be about 6% worse than City expectations of £543m, after a 7% rise to £528m in the year to 31 January.
Sales at the group slid by 1.5% to £12.8bn year on year as steady trade in the UK and Ireland and strong growth in Poland were offset by a continuing large slide in France, where the group operates Castorama and Brico Dépôt.
Garnier said the company was being cautious in its outlook as mortgage rates and worries about employment were likely to dampen consumer spending despite a surge in sales of “big ticket” items, such as kitchens and bathrooms, in the final quarter of the year.
Garnier said the group had benefited from improved ranges and the closure of stores by its UK rival Homebase, which collapsed into administration in November.
Kingfisher expects to offset the higher tax costs by fast-tracking plans to reduce the size of its distribution centres, in the UK, France and Poland, putting more self-checkouts in stores. Garnier said there could be job cuts but overall the group was likely to hire more people in the UK as it opens more Screwfix and B&Q stores.
Garnier said that UK and Irish consumers had remained “relatively resilient” in recent years as they continued to repair and renovate their homes.
