Starbucks UK Retail Arm Pays Zero Corporation Tax Despite 525 Million Revenue Stream

The British division of global coffee giant Starbucks has reported paying no corporation tax for the fiscal year 2024, despite generating sales of £525.6 million. The company’s UK retail operations posted a £35 million loss after transferring £40 million in royalty and licence fees to its parent organisation.

The disappointing performance comes amid what the company describes as a “challenging economic climate” and consumer boycotts linked to the Gaza conflict. The sales decline of 4% occurred despite the coffee chain’s expansion efforts, which saw 100 new British stores opening during the reporting period.

The company’s financial position marks a significant reversal from the previous year’s £16.9 million pre-tax profit. Trade suffered notably after Starbucks appeared on boycott lists due to perceived connections with Israel, though the company steadfastly denies any political affiliations, stating they do not direct profits toward governmental or military operations.

Rising operational costs have forced the chain to implement price increases of up to 4% on its beverage offerings. A standard cappuccino now commands £4.70, while premium drinks such as caramel macchiatos reach £6.10. These price adjustments reflect mounting pressures from inflation across key ingredients, including coffee beans, cocoa, and milk.

The parent company has demonstrated its commitment to the UK market by injecting £50 million through a revolving credit facility and capital injection. This financial support arrives as Starbucks faces intensifying competition in prime locations, particularly from value-focused rivals like Greggs and Caffè Nero.

Despite current challenges, Starbucks maintains ambitious expansion plans, announcing intentions to launch 80 additional stores in the coming year. This strategy comes as the company grapples with changing consumer behaviours and increased market competition in key metropolitan areas.