Recent research highlights the significant tax burden on the retail sector.
- Retailers contribute 7.4% of all business taxes, despite making up only 5% of GDP.
- High business rates are leading to store closures across the UK.
- Proposed reforms could alleviate the sector’s tax pressures.
- A 20% Retail Rates Corrector is suggested to level the playing field.
The retail sector is facing a considerable tax burden, with new research from the British Retail Consortium (BRC) illustrating a disparity in taxation compared to other industries. Retailers are responsible for 7.4% of all business taxes, totalling £33 billion, while comprising just 5% of the GDP. This disproportionate tax impact is evident, with business rates alone accounting for 11% of retail profits, which represents the steepest rate of any business sector.
The financial strain on retailers is exemplified by the closure of 6,945 stores in 2024 alone, equating to an average of 38 closures daily. These closures often cite high business rates as a significant factor in decision-making, as supported by data indicating that two-thirds of retail outlet closures in the past five years were materially influenced by these rates. The Labour Party’s manifesto acknowledges this issue, noting that the prevailing business rates system disincentivises investment and fosters uncertainty, thereby exacerbating the challenges faced by high streets nationwide.
Without intervention, the BRC warns of potential further closures, with up to 17,300 shops at risk over the next decade. This issue not only hinders retail growth but also affects broader economic factors such as investment in staff wages, skill development, and technology advancements that are essential for enhancing productivity, supporting decarbonisation efforts, and stimulating economic expansion.
In response to these challenges, the BRC has made a submission to the government’s Autumn Budget, advocating for a 20% Retail Rates Corrector. This proposal aims to reduce retail property tax bills, in line with the government’s manifesto promises to reform the existing system. Helen Dickinson, CEO of the BRC, argues that this adjustment would create an equitable tax landscape, benefit economic growth, and revitalise high streets across the country.”Introducing a 20% Retail Rates Corrector would be a decisive move that levels the playing field between different sectors of the economy,” she stated.
The proposed tax reform presents an opportunity to alleviate the retail sector’s financial pressures, encouraging future growth and stability.
