Retailers face highest effective tax rate in UK economy, BRC finds

Retail businesses faced an effective tax rate of 71.5% in 2025/26, the highest of the 11 sectors analysed by the British Retail Consortium (BRC), as the trade body warned that rising business taxes are putting pressure on jobs, investment and prices.

New analysis commissioned by the BRC and carried out by economic consultancy Flint Global found that retailers paid £39.1 billion in business taxes during the year through business rates, employer National Insurance contributions, VAT and other government taxes.

For every £1 of pre-tax profit made by retailers, the equivalent of 72p was paid in business taxes. The average effective tax rate across the 11 sectors analysed was 50%, while banking had an effective rate of 40.5%.

Hospitality had an effective tax rate of 81.6%, with the sector paying £22.9 billion in business taxes.

The BRC said the level of taxation was putting further pressure on employment, with retail jobs falling by 122,000 between the second quarters of 2024 and 2026. The sector currently employs around 2.8 million people.

Retail and hospitality are among the UK’s largest employers and provide a significant proportion of entry-level and flexible jobs. The BRC said higher employment costs following the 2024 Budget had contributed to the decline in jobs across the two sectors.

The analysis found that retail and hospitality together paid £62 billion in taxes during 2025/26, while the two sectors account for almost a third of all business rates raised nationally.

The BRC said high streets were particularly exposed to rising business taxes because of the concentration of retail and hospitality businesses in town and city centres. It said one in seven high street properties across the country is currently empty.

Helen Dickinson, Chief Executive of the BRC, said: “For every £1 of pre-tax profit made by retail, the equivalent of 72p is now paid in business taxes. This punishing tax burden has clear consequences: job losses, shuttered shops, and a missed opportunity to drive growth in every postcode.”

The BRC and UKHospitality are calling on the Chancellor to reduce the cost burden facing the sectors ahead of the Budget, including by removing high-street retail and hospitality businesses from the Government’s high-value business rates multiplier.

The findings follow the BRC’s recent call for a freeze in business rates at the Autumn Budget, after it warned that rising inflation would increase retailers’ rates bills when they are reassessed in April.

The latest analysis also comes after TheIndustry.fashion reported in March that UK retail employment had fallen to its lowest four-quarter average on record, with the BRC warning that rising employment costs were putting further pressure on staffing and investment.