Lidl is punished for going green as business rates on solar panels surge by 700 per cent 

Lidl is being penalised with huge increases in its business rates because it installed solar panels on its stores in a push to go green.

The supermarket said its plans to invest £3million this year on the panels were being undermined by an up to 700 per cent rise in rates charged on them.

The revelations will add to the pressure on Chancellor Rishi Sunak to reform business rates in the Budget. 

Lidl – which has 800 stores – was paying £689 on the solar panels on a typical shop, but that has risen 528 per cent to £4,329 a year.

The increase comes under an obscure change in 2017 in the way rates are charged on solar panels.

The German-owned discount retailer has now said its plans for more are ‘under continuous review’.

Critics say this is making a mockery of the Government’s goal of an environmentally friendly economy.

Dominic Curran, of the British Retail Consortium, said: ‘If the Government wants to help the environment and encourage investment, they should use the Budget to provide a relief that incentivises new investment. That would allow firms to make improvements… without facing a higher tax liability.’

Business rates are administered by the Valuation Office Agency, an offshoot of HMRC, which uses a formula based on the rental value of a firm’s premises.

Putting in solar panels is classed as an improvement that enhances rental value. Therefore, a higher bill is charged.

But a change in the way the rules are applied in 2017 means retailers are in certain circumstances being slapped with severe increases.

Typically, charges have gone up around 700 per cent. For instance, on a one megawatt panel the rates rose from around £4,000 to £30,000 a year.

The increase applies only to firms that own their solar panels and use the energy themselves.

If the panels are owned by another company, or if the power generated is sold to the national grid, the rate rises do not kick in.

Lidl has put panels on seven stores so far but wants to add them to 15 more a year. 

They can generate nearly a third of the energy needed in one of its supermarkets, meaning a big cut in its energy bills and a benefit to the environment.

The Mail’s Save Our High Streets Campaign has been calling for sweeping reforms to business rates.

A review by the Commons Treasury committee last autumn said that if the Government wanted a green economy it should ensure businesses that invest in green assets were not hit by higher business rates as a result.