The United Kingdom now carries the highest property tax burden among all major global economies, according to a new report from global tax firm Ryan. The annual business rates review highlights that the UK ranks first worldwide for property taxes as a share of gross domestic product (GDP), with experts warning that this could dampen business investment.
UK Leads in Property Tax as Share of GDP
The report, published on Monday, analysed the latest comparable international data and found that the UK not only leads in property tax relative to GDP but also ranks second globally for total property tax revenues. This comes as thousands of British companies prepare for a significant increase in their business rates payments for the upcoming financial year.
Business rates receipts are forecast to climb to £37.1 billion across the UK for the 2026/27 financial year, up from £33.6 billion the previous year. This rise follows the revaluation of business rates in England, Wales, and Scotland, which has led to higher bills for many firms.
Impact on Investment and Sectors
Alex Probyn, practice leader for Europe and Asia-Pacific property tax at Ryan, stated: "The UK sits at the very top of global rankings for property tax. That is not a marginal difference but it reflects a system where property is taxed more heavily than in any other comparable economy." He added that the result is that business property carries a disproportionate share of the overall tax burden, which is beginning to weigh heavily on investment, particularly in sectors reliant on physical assets and long-term capital.
The Government has announced targeted business rates support for pubs and music venues, but other sectors, such as hotels, have warned about predicted rises in their property tax bills. The report notes that property tax receipts continue to increase due to inflation-linked rises, policy changes, and the withdrawal of pandemic-era reliefs.
Systematic Issues
Mr Probyn emphasised: "Property taxes in the UK are the highest by international standards, and the system is designed in a way that continues to increase the yield over time. That creates a clear tension between the need to raise revenue and the need to support investment. That balance has to be addressed."
The findings underscore growing concerns among businesses about the UK's competitive position, as high property taxes may deter investment and hamper economic growth. Stakeholders are calling for a review of the business rates system to alleviate pressure on firms and foster a more favourable environment for capital expenditure.
