Starbucks UK tax credit rises as sales and store openings grow

Starbucks kept expanding in the UK even as it booked a corporation tax credit. Revenue at Starbucks Coffee Company (UK) Ltd rose 6% to £556.3m for the year to 28 September 2025, but the operating loss widened to £29.8m and loss before tax to £41.3m.

The company said the tax credit reflected deferred-tax timing differences and a prior-year adjustment. In plain terms, the structure can leave the UK business with less taxable profit even when sales are climbing, because royalty fees and other intra-company charges move money within the group rather than leaving all of it to be taxed in Britain.

That tension sat alongside a stronger top line. Starbucks said sales were lifted by higher customer transaction volumes, price increases, loyalty-scheme activity and the rollout of freshly baked in-store food. The company opened 92 new UK coffeehouses in FY25, taking its UK store count to 1,304. Starbucks Rewards sales rose 45% and accounted for 42% of total UK sales, while active membership grew 41%.

The royalty question is what keeps drawing scrutiny. In evidence to Parliament’s Public Accounts Committee, Starbucks said UK and other EMEA units paid a 6% royalty to headquarters in Amsterdam, later saying Her Majesty’s Revenue and Customs reduced the deductible rate to 4.7% after an audit. That matters because royalties are fees paid for the right to use the brand, and when those fees are booked in the UK they can reduce the profit left behind for UK tax.

The company’s UK tax history has been under a microscope for years. In 2012, Reuters reported that Starbucks had paid just £8.6m in UK taxes over 14 years on more than £3bn of sales. Starbucks entered the UK market in 1998 through the acquisition of The Seattle Coffee Company, which operated 60 UK stores, and the current UK holding company, Starbucks Coffee Holdings (UK) Ltd, was incorporated on 1 April 1997 and is registered in west London.

Duncan Moir, Starbucks EMEA president, said the company was operating in a "tougher and more competitive market" but was seeing progress under its "Back to Starbucks" plan. Starbucks said it plans to open more than 75 new UK stores in FY26 and another 500 over the next five years, a growth plan that will keep pressure on whether investment shows up not just in store counts and sales, but in the conditions for the people staffing the counter.