Retailers are handing over the equivalent of 72p in tax for every £1 of pre-tax profit they make, according to new analysis that lays bare the huge cost burden facing the UK high street.
Research from the British Retail Consortium and UKHospitality found retail and hospitality face the highest effective tax rates of any major sector of the economy, with the two industries paying a combined £62bn in business taxes during 2025/26.
The retail sector’s tax burden stands at 72p for every £1 of pre-tax profit, while hospitality businesses pay 82p.
That compares with an average of 50p across the 11 main sectors analysed and just 40.5p for the banking industry.
The £62bn bill encompasses VAT, business rates, employer National Insurance contributions and other taxes, placing further pressure on retailers already grappling with rising employment, property and energy costs.
The BRC warned that the escalating burden is already having a major impact on jobs and investment across the sector.
Retail employment has fallen by 122,000 jobs in the past two years, while hospitality has lost a further 93,000 roles, following billions of pounds of additional employment costs introduced in the 2024 Budget.
The trade bodies warned that high streets are particularly exposed because shops, pubs and restaurants shoulder a disproportionate share of business rates.
Retail and hospitality together contribute almost a third of all revenue raised through the property tax, while one in seven high street properties across the country is currently vacant.
BRC chief executive Helen Dickinson said the tax burden was contributing to “job losses” and “shuttered shops”, while limiting the sector’s ability to invest and keep prices down.
The trade body has previously said retail taxes have risen 20 per cent over the past two years, with the sector now paying £1.8bn more in business rates than it did two years ago.
BRC calls for Budget action
Ahead of the Budget, the BRC and UKHospitality are urging Chancellor John Healey to reduce the cost burden on high street businesses, including removing retail and hospitality properties from the government’s high-value business rates multiplier.
The groups warned that further increases could ultimately feed through into higher prices for shoppers at a time when inflation remains above the Bank of England’s two per cent target.
Dickinson said the Chancellor faced a choice between continuing to increase costs on high street businesses or giving them greater room to invest in jobs and growth.
A government spokesperson said more than 750,000 retail, hospitality and leisure properties already benefit from lower business rates multipliers, adding that decisions on taxation would be set out at fiscal events.
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