High taxes on retailers and hospitality businesses are contributing to rising vacancy rates and undermining high street regeneration, industry bodies have warned.
One in seven high street properties across the UK is now empty, according to analysis from the British Retail Consortium.
The organisation says retail and hospitality businesses paid a combined £62 billion in taxes during 2025/26 through business rates, employer National Insurance contributions, VAT and other levies.
It argues that the burden is reducing occupier demand, restricting investment in premises and making it harder for town centres to replace businesses that close.
PROPERTY COSTS UNDER PRESSURE
Retailers pay the equivalent of 72p in business taxes for every £1 of pre-tax profit, while the hospitality sector pays 82p, the analysis finds.
That compares with an average effective tax rate of 50p across 11 major sectors and 40.5p for banking.
Retail and hospitality together account for almost a third of all business rates collected, leaving physical high street operators particularly exposed to changes in property taxation.
The sectors have also lost more than 200,000 jobs over the past two years, including 122,000 in retail and 93,000 in hospitality.
The BRC and UKHospitality are calling on the Chancellor to exclude high street retail and hospitality premises from the Government’s business rates high-value multiplier at the forthcoming Budget.
REGENERATION AT RISK
Helen Dickinson, Chief Executive of the British Retail Consortium, says: “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.”
Allen Simpson, Chief Executive of UKHospitality, says the level of taxation has weakened the sector’s ability to create jobs and support high street regeneration.
“If the Government wants to create jobs and drive growth in every postcode, it needs hospitality and the high street firing on all cylinders,” he adds.
UKHospitality is calling for an increase in the retail, hospitality and leisure business rates discount alongside support for operators affected by the 2026 revaluation.
