When executives complain about tax, they rarely have just one levy in mind. A North Sea producer facing an effective tax rate of 78 per cent on profits, a drinks importer hit three times by a packaging payment glitch and a venue staring at a 300 per cent jump in rateable value all see different headlines, but the same trend.
Behind the noise sits a structural shift. 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.
This is less a story about one controversial levy and more about how overlapping charges quietly rewrite business models. Energy, logistics, consumer goods and live entertainment are all discovering that their margins depend as much on the interaction between taxes as on any single rate. For smaller firms, the administrative drag is becoming almost as significant as the cash cost.
What do we actually mean by a UK tax stack?
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.
In the North Sea, the stack is brutally visible. The Energy Profits Levy has been increased three times since 2022 and, combined with existing ring fence taxes, leaves some upstream projects facing an effective tax rate of 78 per cent. Industry groups and recent chamber of commerce reports warn that without reform, output could fall by around 40 per cent by 2030, putting tens of thousands of jobs at risk as investment shifts overseas.
Packaging producers are grappling with a different configuration. Under the Extended Producer Responsibility scheme, firms above certain thresholds must fund the full net cost of household packaging waste collection and recycling, raising more than 1 billion pounds a year for councils once fully implemented. When a direct debit glitch recently led to nearly 500 companies being charged two or three times at once, right in peak trading season, it exposed how tight cash flows are even in sectors that look profitable from the outside.
On the property side, business rates restructure the stack again. Draft values for the 2026 revaluation show sharp increases for some large venues and logistics sites, with analysis suggesting arena rateable values could rise by up to 300 per cent and a wider 15 per cent jump in the overall English tax base, equating to an extra 1.8 billion pounds a year in business rates for major employers.
Snapshot
The new tax stack is not one law but the combination of windfall taxes, producer levies, business rates and higher NICs, which together can turn viable projects into marginal ones even when any single rate appears manageable.
How is the stack hitting energy, logistics, FMCG and live events?
Energy: investment decisions on a knife edge
The North Sea is the clearest example of a stacked regime changing long term plans. A 78 per cent marginal tax rate on oil and gas profits, combined with volatile prices and high capital costs, means only the most resilient projects still make sense. Trade bodies point to survey data showing one in three offshore firms expecting to cut North East Scotland headcount within five years, and over 40 per cent of forecast 2026 revenue coming from outside the UK Continental Shelf as companies divert activity to more predictable regimes.
For integrated energy companies, the result is a strategic pivot. New UK exploration is shelved, while any surplus cash is steered into lower risk renewables or overseas hydrocarbons. That choice is influenced by the total tax stack, not just the headline levy, because higher employer NICs and business rates on plant add to lifecycle costs. Ultimately it affects domestic supply, the pace of transition and the stability of supply chains that depend on offshore work.
Snapshot
In energy, the tax stack pushes firms to move capital abroad or towards lower risk assets, which may be rational for shareholders but leaves domestic output and supply chains exposed.
Logistics and FMCG: thin margins, thick rulebooks
Logistics operators sit at the junction of several levies. Warehouses and distribution centres are typically high value properties, so they feel the full force of business rates revaluations. Fleet operators face fuel duties, clean air charges and vehicle tax, while employer NICs rise in parallel. On top of that, any firm that is the first UK owner of packaged goods must register for packaging EPR fees, which vary by material and recyclability.
Consumer goods manufacturers face similar layers. Many operate on tight operating margins of 3 to 5 per cent, so incremental increases in packaging fees and transport costs quickly drive pricing decisions. Industry groups have already warned that extended packaging charges are likely to push up the price of everyday items such as drinks and household goods, as producers pass through the cost of meeting higher recycling standards.
The compensation for public sector employers on NICs does not apply here, so private producers carry the full burden of higher payroll taxes as well as the administrative load of complying with complex new packaging rules. For mid sized FMCG brands that lack the economies of scale of multinationals, the tax stack constrains their ability to invest in new products or decarbonisation projects.
Live entertainment: business rates and fragile venues
Live events are caught by a different combination. The 2026 revaluation is expected to more than double the business rates bills for some arenas by the end of the cycle, as rateable values catch up with higher takings and new venues. Analysis by tax consultancies suggests that flagship arenas in London and Manchester could see rateable values jump by up to 300 per cent, with transitional relief only delaying the full impact.
At the same time, employer NICs, local licensing fees and policing costs all feed into the stack. Big operators have some ability to absorb shocks, but the likely outcome is higher ticket prices and shorter tours, as promoters trim dates to manage risk. Smaller venues, already operating on slim surpluses, risk closure if they cannot negotiate reliefs or benefit from cultural exemptions.
Snapshot
Whether you run a rig, a warehouse or an arena, it is the combined effect of national levies, local rates and sector specific rules that dictates whether your next project clears the hurdle rate.
How are finance teams adapting to the new tax stack?
Inside boardrooms, tax has shifted from a narrow compliance function to a strategic mapping exercise. Finance teams are building internal dashboards that show how energy levies, packaging fees, rates and NICs interact across sites and product lines, often colour coding exposures by region or business unit. Many teams now generate visual risk heat maps every quarter and, in practical terms, an online image editor is a quick way to update those charts in board packs as thresholds and draft valuations move.
Scenario planning is becoming more visual too. Rather than relying solely on dense Excel models, CFOs are presenting a small set of diagrams that show how cash flows change under different policy paths, such as an early end to the Energy Profits Levy or a steeper business rates multiplier. When those diagrams need to be localised for different audiences, from lenders to unions, using an online image editor to tweak labels, currencies or annotations saves time compared with commissioning fresh graphics for each iteration.
For SMEs that lack a full tax department, the response is necessarily scrappier. Owner managers might sketch a simple tax stack for their business on a single slide, showing corporation tax, NICs, sector levies and local charges as separate blocks. Even there, a basic online image editor is often enough to turn a rough sketch into something legible for a bank manager or potential investor, so stakeholders can see at a glance where margins are under the most pressure.
Snapshot
The complexity of the stack is pushing finance teams towards more visual, scenario based planning, turning tax into a design and communication problem as much as a legal one.
Who actually benefits from this shift in the tax mix?
Not every business model loses out from a stacked regime. Low waste and circular economy players, for example, can benefit from packaging fees that penalise hard to recycle materials. Brands that invest early in refill stations, lightweight packaging or concentrated formulas reduce their fee exposure and can market that saving to environmentally conscious consumers.
Asset light businesses are natural winners. Software firms, platforms and service providers with modest property footprints and relatively small payrolls face lower relative exposure to business rates and NICs. They still pay corporation tax and VAT, but the lack of heavy assets or complex packaging supply chains means fewer sector specific layers.
In energy, companies that pivot towards renewables and grid services may benefit from investment allowances or different fiscal regimes, especially if they can demonstrate alignment with net zero goals. The risk is that a punitive stack on hydrocarbons accelerates that shift faster than the domestic supply chain can absorb, leading to offshoring of both fossil and clean energy investment.
Snapshot
The emerging tax architecture rewards low waste, asset light and often more digital models, while squeezing capital intensive, low margin sectors that are hardest to move.
What would a pro growth simplification for SMEs look like?
Few serious voices argue for scrapping environmental or local funding objectives altogether. The debate is about design. For smaller businesses, a growth minded simplification would start with stability: multi year commitments on key rates and thresholds so that investment plans are not constantly rewritten around each fiscal event.
A second step would be consolidation. Rather than piling separate reporting portals and payment timetables on SMEs, government could explore a single interface for sector levies and local charges, with clear dashboards showing cumulative exposure. Minimum thresholds for registration could be aligned, so that firms do not have to track slightly different volume or revenue tests for every scheme.
Third, more of the revenue could be recycled into targeted reliefs that encourage productivity improving investment. For example, allowing faster relief on digitalisation, green equipment or export development in exchange for complying with extended producer responsibility rules would align incentives rather than simply extracting cash. Support for independent advice, especially for firms in regions with high deprivation or sectoral dependence, would also help avoid a two tier outcome where only large corporates can navigate the system efficiently.
Finally, the state could do more to model its own tax stack explicitly. Publishing regular impact assessments that show how new policies interact with existing levies across typical business types would give entrepreneurs a clearer sense of the playing field and might dampen some of the political volatility that has characterised recent tax policy.
In summary
The new UK tax landscape is less about headline rates and more about interaction. A North Sea operator, a drinks importer, a logistics warehouse and a music venue now face overlapping levies that build into a heavy stack, even when individual measures look reasonable in isolation. That stack is already steering capital, pricing and hiring decisions in ways that will only become fully visible over the coming decade.
For government, the challenge is to meet fiscal, environmental and social goals without hollowing out the very sectors that supply energy, jobs and culture. For businesses, the task is to understand their own tax stack in detail, adjust business models where possible and make a persuasive case when the architecture stops adding up. The firms that treat tax as part of strategic design, not just compliance, will cope best with a regime where the real pressure comes from the layers, not just the labels.
FAQ
What is meant by the UK business tax stack?
The tax stack refers to the combined effect of corporation tax, VAT, employer National Insurance, sector levies such as the Energy Profits Levy and packaging fees, plus local charges like business rates, congestion and clean air zones.
Why is the Energy Profits Levy such a concern for North Sea firms?
Because it sits on top of existing ring fence and supplementary charges, the levy pushes the marginal tax rate on many upstream projects to around 78 per cent, which industry groups say risks driving investment and jobs overseas.
How does the new packaging regime affect consumer prices?
Extended Producer Responsibility rules shift the full net cost of household packaging waste to producers. Many companies expect to pass some of that cost into the prices of everyday items such as drinks, food and appliances.
Why are live entertainment venues worried about the 2026 revaluation?
Draft rateable values indicate that large arenas could see property tax valuations rise by as much as 300 per cent, meaning business rates bills are likely to more than double over the next cycle, which could feed into higher ticket prices.
What would help small businesses cope with these changes?
SMEs would benefit from more stable multi year tax plans, simpler and more aligned thresholds, consolidated reporting portals and reliefs that reward investment in productivity, digital tools and lower waste operations.