Retail and hospitality sectors face the highest effective tax rates
Research from the British Retail Consortium (BRC) has shown that retail and hospitality have the highest effective tax rates of any sector in the UK.
This stifling tax burden consequently leads to fewer jobs for young people, a contraction in investment, and higher prices for the end consumer, according to the BRC.
Its research involved comparing taxes paid and profits made across 11 sectors of the UK economy, with retail and hospitality paying a combined £62 billion in taxes in 2025/26 through business rates, employer National Insurance Contributions (NICs), VAT, and other government taxes.
The body identifies the disastrous 2024 Budget as a key inflection point for the two sectors, as billions of pounds was added to the cost of employment, with 122,000 jobs subsequently being lost in retail as a result.
The BRC’s calculations show that for every £1 of pre-tax profit made by the sector, retailers paid the equivalent of 72p in business taxes — one of the highest rates for any sector.
“The Chancellor faces a choice: to continue to pile taxes onto 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 Helen Dickinson, chief executive of the BRC.
“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.
“This punishing tax burden has clear consequences: job losses, shuttered shops, and a missed opportunity to drive growth in every postcode.
“For the benefit of high streets, young people and shoppers everywhere, the Chancellor should use the Budget to deliver a clear path to reducing the rates burden, now and in the future.”
