High Street Warns of a “Punishing Tax Burden”: What the BRC’s Figures Mean for Retail and Hospitality

BUDGET WATCH

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The Prime Minister has just unveiled a £210m package to turn derelict high street buildings into shared workspaces and community hubs, arguing that too many town centres have been hollowed out. Retailers have welcomed the attention, but the British Retail Consortium (BRC) says revival efforts will be undermined unless the tax burden on high street businesses is also addressed.

What the BRC found

The BRC’s analysis says retail and hospitality paid a combined £62bn in taxes in 2025-26, through business rates, employer National Insurance, VAT and other levies. It describes this as the highest effective tax rate of any UK sector.

Retailers: 72p in business taxes for every £1 of pre-tax profit.

Hospitality: 82p for every £1 of pre-tax profit.

For comparison: an average of 50p across the economy, and 40.5p for the banking sector.

The BRC says this burden is leading to fewer jobs for young people, lost investment and higher prices for customers. It points to measures in the 2024 Budget which, it argues, added billions of pounds to employers’ costs.

The business rates point

The BRC highlights that retail and hospitality together pay almost a third of all business rates, and links this to one in seven high street properties lying empty. Its chief executive, Helen Dickinson, is calling on the Chancellor to use the Budget to set out a clear path to reducing the rates burden, now and in the future.

These are the BRC’s views as a trade body. The government has its own priorities, including the high street package announced last week, and the Budget will show how it weighs these competing pressures. Separately, an earlier report mentioned a planned 20% cut in business rates for pubs, social clubs and live music venues, though that would not take effect until the new financial year.

What can you do in the meantime?

Check your business rates. Make sure your rateable value is correct and that you are claiming every relief you qualify for. We can help you review your bill.

Know your true cost base. Add up your employment costs, rates, VAT and other taxes so you can see how much of each £1 of profit they take.

Build a forecast. A cash flow forecast with a few ‘what if’ scenarios lets you see how Budget changes might affect pricing, hiring and investment.

Review pricing and margins. If costs rise, decide in advance how much you can absorb and how much you need to pass on.

Plan for 28 October. We will review the announcements as soon as they are made and tell you which ones matter to you.

Retailers and hospitality businesses have faced a tough run of cost increases. Whatever the Budget brings, clear numbers and early planning give you the best chance of staying ahead. If you would like to talk through your position, get in touch.

KEY TAKEAWAYS The BRC says retail and hospitality paid £62bn in taxes in 2025-26. Retailers pay 72p, and hospitality 82p, in business taxes for every £1 of pre-tax profit, against 50p across the economy. Review your business rates and run forecasts ahead of the Budget on 28 October.