Buyers have been spared the new online sales tax – for now


Mike Cherry, national president of the Federation of Small Businesses, said new taxes should be avoided. “Small businesses already face a host of expenses when selling online, including marketplace fees, card transaction fees and courier fees.

The government must avoid simply adding further cost pressures to small businesses that have increased their online presence to keep the show going during lockdowns. »

Ministers have already completed a review of the tax system which ‘concluded that the business charging system should not be torn up as fares fund vital local services and there is no alternative with widespread support which would generate sufficient revenue to replace them”.

Professional rates will bring in almost £30 billion in the coming financial year. To replace them, taxes amounting to the equivalent of 4 pc on the VAT, or 5 pc on the basic rate of income tax, would have to be found elsewhere.

Still, “some retailers with a stronger physical presence consider their industry to be overburdened by commercial pricing relative to online competitors,” the consultation said, while acknowledging that some businesses have both in-store and online operations.

The consultation, which will last three months, asks whether an online sales tax should be introduced and, if so, how it would work.

Potential issues include the administration of commercial tariffs, which is devolved to UK nation administrations, while identifying the mode of sale can also be tricky when orders may be placed in-store via an app or through other methods. remotely, in particular by telephone and post. orders.

The tax status of click-and-collect purchases, with goods purchased online but picked up in-store, can also be tricky to define.

There is already a separate digital services tax which came into force in April 2020 and takes a 2% slice of revenue from tech companies such as search engines, marketplaces and social media sites, bringing in around $600 million. pounds per year.


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