Retail bosses have warned that the introduction of a surtax on large stores could lead to higher prices for shoppers.

Supermarkets are set to face a jump in business rates payments at the Budget following a reported Treasury U-turn, with retail bosses warning the move could lead to higher prices for shoppers.

The caution comes amid a backdrop of cost hikes for the sector earlier this year and elevated food inflation for UK shoppers.

The Government is planning to introduce a new business rates “surtax”, which will mean many larger commercial properties will face a higher rate of the property tax in order to help fund a permanent discount for smaller retailer, leisure and hospitality firms.

The higher tax level is set to be applied to commercial properties with a rateable value above £50

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