Story Highlight
– Retailers face high tax burden impacting investment and jobs.
– Analysis shows retailers paid £39.1 billion in business taxes.
– Retail employment dropped by 122,000 from 2024 to 2026.
– One in seven high street properties now vacant.
– BRC calls for tax reforms to support high street businesses.
Full Story
Retailers in the UK are grappling with increasing pressures stemming from the current tax and business rates system, according to a recent report by the British Retail Consortium (BRC). This situation is hampering investment, jeopardising employment, and intensifying challenges for businesses on the high street.
A study conducted by Flint Global revealed that retailers contributed £39.1 billion in business taxes during the fiscal year 2025/26, translating to an effective tax rate of 71.5% of their pre-tax profits. The hospitality sector faced an even steeper tax rate of 81.6%, while the average effective rate across 11 significant sectors stood at 50%.
The BRC has emphasised that this tax burden is hindering the capacity of retailers to invest, recruit staff, and control prices, with the difficulties being particularly pronounced for high street establishments.
Data from the Office for National Statistics cited by the BRC indicates a decline in retail employment, with a loss of 122,000 jobs recorded between Q2 2024 and Q2 2026. The current workforce in this sector is approximately 2.8 million.
The report points out that high street businesses are disproportionately affected by business rates, with retail and hospitality together contributing nearly a third of the total business rates collected. Additionally, one in seven high street properties in the UK is vacant.
Watch retailers are also feeling the strain as they tackle escalating operating expenses, fluctuating consumer preferences, and significant costs associated with their physical locations.
The BRC asserts that the rising business taxes are limiting retailers’ ability to reinvest in jobs and local communities and could potentially lead to higher prices for consumers. As of now, UK inflation sits at 3.1%, exceeding the Bank of England’s 2% target.
In the lead-up to the Budget, the BRC and UKHospitality are urging the Chancellor to alleviate the financial pressure on high street enterprises by removing retail and hospitality businesses from the Government’s business rates high-value multiplier.
Helen Dickinson, the BRC’s chief executive, remarked that the existing tax burden endangers jobs and deters investment in high streets.
“Millions of people rely on retail jobs across the country, but the overwhelming tax burden puts those people at risk, with over 100,000 jobs lost in the last two years,” she stated. “The punishing tax burden has clear consequences: job losses, shuttered shops, and a missed opportunity to drive growth in every postcode.”
The BRC’s analysis indicates that the total tax contribution from retail and hospitality is projected to reach £62 billion for the fiscal year 2025/26, encompassing business rates, employer National Insurance Contributions, VAT, and other governmental taxes.
These figures emerge as the retail industry advocates for adjustments to the business rates framework to bolster high street enterprises and foster job creation.
