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UK has highest property tax burden of major economies, report says

UK has highest property tax burden of major economies, report says

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According to one report, the UK has the highest commercial property tax burden of any major economy.

The findings from global tax firm Ryan's annual review of business rates come as thousands of UK businesses prepare for an increase in their rates payments next year.

The report, published on Monday, found that the UK ranks first globally in property taxes as a percentage of gross domestic product (GDP).

Experts indicated that the high tax burden could affect the investment plans of UK companies.

It also found that the UK ranks second in total property tax revenue, based on analysis of the latest comparable international data available.

The findings come as business rates revenue is forecast to rise to £37.1 billion across the UK for the 2026/27 financial year, up from £33.6 billion the previous year, following the revaluation of business rates in England, Wales and Scotland.

The Government announced targeted business rates support for pubs and music venues, but many other sectors, such as hotels, have warned of expected increases in their property tax bills.

Alex Probyn, practice leader for property tax in Europe and Asia-Pacific at Ryan, said: “The UK is at the top of the world rankings for property tax.

“That's not a marginal difference, but it reflects a system in which property is taxed higher than in any other comparable economy.

“The result is that commercial property accounts for a disproportionate share of the overall tax burden, and that is starting to weigh heavily on investment, particularly in sectors that rely on physical assets and long-term capital.”

Ryan's analysis shows that property tax revenues continue to rise due to inflation-related increases, policy changes and the withdrawal of pandemic-era relief.

Probyn added: “Property taxes in the UK are the highest by international standards, and the system is designed in a way that continues to increase performance over time.

“That creates a clear tension between the need to increase revenue and the need to support investment. That balance needs to be addressed.”