LONDON - Tesco, Britain's biggest retailer, said on Wednesday it will repay 585 million pounds ($785 million) of COVID-19 pandemic business rates relief it received from the government as some of the risks of the crisis were behind it.

Britain's supermarket groups have performed well during the pandemic but have been criticised by lawmakers and media for paying shareholders dividends whilst receiving taxpayer money in the form of property tax relief.

They said they were justified in taking the money because of the huge costs they had incurred in feeding the nation during the crisis.

Last month Tesco estimated the pandemic would cost it 725 million pounds in its 2020-21 financial year - well in excess of the rates relief received.

The group said its business had proved resilient during the crisis and had been able to continue trading throughout, unlike many other businesses.

"While business rates relief was a critical support at a time of significant uncertainty, some of the potential risks we faced are now behind us," said Tesco Chief Executive Ken Murphy, who succeeded Dave Lewis in October.

"Giving this money back to the public is absolutely the right thing to do by our customers, colleagues and all of our stakeholders."

Chairman John Allan added that Tesco was "financially strong enough" to return the money.

Excluding the repayment, Tesco said its guidance for retail operating profit before exceptional items for 2020/21 was unchanged.

It expects it to be at least the same level as 2019/20's on a continuing operations basis.

Tesco said it will work with the UK government and devolved administrations on the best means of repaying the money.

Shares in Tesco were down 0.7% at 0808 GMT.

Analysts said Tesco's peers - Sainsbury's, Morrisons and Walmart's Asda will be under pressure to follow suit. All had no immediate comment.

Shares in Sainsbury's were down 3.3%, while Morrisons was down 1.2%.

($1 = 0.7454 pounds)

(Reporting by James Davey; Editing by Edmund Blair and Louise Heavens and Kirsten Donovan) ((james.davey@thomsonreuters.com))