High streets’ ‘punishing tax burden’ is highest in UK economy, costing jobs and pushing up prices

The tax burden being carried by the retail and hospitality sectors is the highest in the UK and means for every £1 of pre-tax profit made by retailers, they pay the equivalent of 72p in business taxes.

For hospitality the figure is an even higher 82p in the pound, new analysis from the British Retail Consortium (BRC) shows.

It compared the taxes and profits paid in 11 main sectors of the economy and found the two sectors paid a combined £62 billion in taxes in 2025/26 through business rates, employer National Insurance Contributions (NICs), VAT, and other government taxes.

The BRC said that this isn’t only pressuring businesses in those sectors but given that they’re two of the UK’s largest employers and the largest source of entry-level and flexible jobs, it’s adding to Britain’s unemployment situation. Retail has lost 122,000 jobs in just two years and one of the biggest groups of people unemployed are the young.

It added that high streets are particularly exposed to the impact of rising business taxes. 

“The presence of retail and hospitality businesses are what keep high streets vibrant and job opportunities available,” the BRC explained. “Yet they pay a disproportionate level of business rates relative to other industries and together cover almost a third of the total raised by the tax. The consequence is one in seven high street properties across the country lie empty.

“Higher taxes leave high street businesses with less money to invest in jobs and local communities and put further upward pressure on prices for shoppers. With inflation currently at 3.1%, well above the Bank of England’s 2% target, further tax rises risk adding to the cost-of-living pressures facing households.”

The report comes not long before the Autumn Budget and includes a plea from the BRC “to put local communities first and reduce the cost burden on these two sectors, including removing high street retail and hospitality businesses from the government’s business rates high-value multiplier. Doing so will help protect the millions of people working there and support those who would be hit by higher prices if these warnings are ignored”.