Hospitality has the highest tax burden in the economy, new data reveals

New analysis from the British Retail Consortium (BRC) compared the taxes and profits paid in 11 main sectors of the economy. It found that, combined, hospitality and retail paid a £62 billion in taxes in 2025/26 through business rates, employer National Insurance Contributions (NICs), VAT, and other government taxes.

For every £1 of pre-tax profit made by the sector, hospitality businesses paid the equivalent of 82p in business taxes, while for retail businesses this figure was 72p in the pound. 

These are the highest rates for any sector, well above the 50p average effective tax rate of all eleven main sectors of the economy, including the 40.5p tax rate of the banking industry. Hospitality and retail’s effective tax rates rose further in 2026/27.

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. 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 1 in 7 high street properties across the country lie empty.

Allen Simpson, Chief Executive of UKHospitality, said: “This staggering data proves what we have long been saying: that hospitality is vastly overtaxed and has the highest tax burden in the economy.

“With more than 80% of every pound made going back to the Government, it is no surprise that our ability to create jobs, drive growth and regenerate the high street has been severely damaged.

“If the Government wants to create jobs and drive growth in every postcode, it needs hospitality and the high street firing on all cylinders.

“Hospitality’s tax burden needs to be dramatically reduced. We need an entire hospitality solution to business rates, which the Government can achieve by increasing the retail, hospitality and leisure discount and providing support to the businesses hardest hit by the 2026 revaluation, in line with the support given to pubs.”

Helen Dickinson, Chief Executive at the British Retail Consortium, said: “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.

“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.

“For every £1 of pre-tax profit made by retail, the equivalent of 72p is now paid in business taxes. 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.”