The retail sector is facing a significant tax burden, according to new research from the British Retail Consortium (BRC).
- Retailers contribute 7.4% of business taxes, despite only making up 5% of the GDP.
- Business rates take a substantial toll, accounting for 55% of pre-tax profits in the sector.
- Store closures have accelerated, with 6,945 outlets shutting in 2024 alone, often due to high business rates.
- The BRC proposes a 20% Retail Rates Corrector to alleviate this burden and stimulate economic growth.
The latest research from the British Retail Consortium (BRC) highlights an ongoing issue within the retail sector: a disproportionately high tax burden. Despite contributing just 5% to the UK’s GDP, retailers are responsible for 7.4% of all business taxes, which amounts to £33 billion. This tax imposition represents a significant portion of 55% of the industry’s pre-tax profits, placing retail alongside hospitality as the most heavily taxed business sectors.
Business rates pose a particular challenge, consuming 11% of profits, which is the highest rate faced by any sector. As noted by the BRC, the consequences of such a tax burden are clear, with numerous shops shuttered and high streets declining across the nation. Fresh findings from PwC reveal an alarming rate of store closures, with 6,945 outlets shut in 2024—equating to 38 closures daily, an increase from 36 the previous year.
The impact of these business rates was recognised in Labour’s election manifesto, which criticised the system for disincentivising investment, creating uncertainty, and placing an undue burden on high streets. In the past five years, approximately 6,000 shops closed, with business rates materially affecting decision-making in two-thirds of these cases. Without intervention, up to 17,300 more shops could close in the next decade.
The far-reaching effects of this tax burden are obstructing investment in employee wages, skill development, and technological advancements—ventures essential for enhancing productivity, supporting decarbonisation efforts, and driving broader economic growth.
In response, the BRC is advocating for a 20% Retail Rates Corrector in its submission to the upcoming Autumn Budget. This proposed correction aligns with the government’s manifesto commitment to reform the business rates system and revitalise declining high streets. According to BRC CEO Helen Dickinson, introducing the 20% Retail Rates Corrector would ‘level the playing field’ between sectors and provide retailers an immediate opportunity to reinvest, promoting growth and rejuvenating high streets nationwide.
The British Retail Consortium underscores the urgency for governmental action on retail tax reform to support industry stability and growth.
