Retail and hospitality face the highest tax burden in the UK economy, BRC warns

Retail and hospitality pay more tax relative to their profits than any other sector of the UK economy, according to new analysis commissioned by the British Retail Consortium (BRC) and carried out by economic consultancy Flint Global.

Retail businesses faced an effective tax rate of 71.5% in 2025/26 — 72p in business taxes for every £1 of pre-tax profit. Hospitality paid even more: an 81.6% effective rate, or 82p in the pound. Both were the highest of the 11 sectors analysed, well above the 50% average, while banking paid 40.5%.

Together, the two sectors paid £62 billion in taxes in 2025/26 — £39.1 billion from retail and £22.9 billion from hospitality — through business rates, employer National Insurance contributions, VAT and other taxes. They account for almost a third of all business rates nationally, while one in seven high street properties stands empty.

The BRC says the burden is costing jobs: retail has lost 122,000 jobs since Q2 2024 and hospitality 93,000, with higher employment costs after the 2024 Budget blamed.

Ahead of the Budget on 28 October, the BRC and UKHospitality called on Chancellor John Healey to remove high-street retail and hospitality from the business rates high-value multiplier. “The chancellor faces a choice: to continue to pile taxes on to our high streets and the millions of households that rely on them, or to give these businesses the breathing space needed to create jobs, deliver growth and hold down prices,” said BRC chief executive Helen Dickinson.

Sources

• The Times — “Hospitality and retail ‘punished’ by highest business tax burden”: https://www.thetimes.com/business/companies-markets/article/hospitality-retail-unfairly-punished-by-highest-business-tax-burden-brc-7zvttnlbn
• Retail Week — “Retail and hospitality carry the highest effective tax rates in the UK, BRC data finds”: https://www.retail-week.com/legal-and-regulatory/retail-and-hospitality-carry-the-highest-effective-tax-rates-in-the-uk-brc-data-finds/7052251.article
• The Grocer — “Retail paying 72p per £1 in taxes, finds BRC analysis”: https://www.thegrocer.co.uk/news/retail-paying-72p-per-1-in-business-taxes-finds-brc-analysis/724273.article
• Drapers — “Retailers pay 72p in tax for every £1 of profit”: https://www.drapersonline.com/news/retailers-pay-72p-in-tax-for-every-1-of-profit
• theindustry.fashion — “Retailers face highest effective tax rate in UK economy, BRC finds”: https://www.theindustry.fashion/retailers-face-highest-effective-tax-rate-in-uk-economy-brc-finds/