The new tax stack: how overlapping levies are quietly rewriting UK business models

"The UK has layered an Energy Profits Levy on top of corporation tax, introduced an extended producer responsibility regime for packaging, scheduled a fresh business rates revaluation for 2026 and signed off employer National Insurance rises for 2025 and beyond. Each measure can be justified on climate, fiscal or fairness grounds. Taken together, they amount to a new tax stack that shapes which investments get made, where jobs are based and which tickets or products rise in price."

"Think of the tax stack as a set of layers rather than a single headline rate. At the base sit corporation tax and VAT. Add to that employer National Insurance, due to rise from 13.8 per cent to 15 per cent in 2025 to 2026, plus sector specific levies such as the Energy Profits Levy and the new packaging fees, and finally local costs like business rates, congestion charges and clean air zones."

Multiple new levies and charges have created a layered tax stack that alters corporate economics across sectors. Corporation tax and VAT remain base layers while employer National Insurance will rise from 13.8% to 15% in 2025–26. Sector-specific levies such as the Energy Profits Levy, extended producer responsibility fees for packaging and a scheduled 2026 business rates revaluation add additional burdens. Combined effects can push effective tax rates to extreme levels — cited as 78% for some North Sea projects — and change investment decisions, location of jobs, consumer prices and administrative costs, particularly for smaller firms.

Read at Business Matters