// Downing Street working on two taxes for retail and tech firms, according to The Sunday Times
// Retailers that saw business boom during pandemic may be faced with one-off tax charge
// Online sales tax measures likely to be announced by the Treasury in autumn
The government is believed to be working on proposals for an “excessive profits tax” for companies that experienced a surge in profits due to the Covid pandemic, according to The Sunday Times.
The Downing Street policy unit is working on a one-off Covid windfall tax to be applied to firms who saw their business boom since national lockdowns in the UK began in March 2020, reported The Sunday Times, citing leaked emails.
- Chancellor mulls online sales tax to rescue bricks-and-mortar
- Amazon’s UK tax to turnover ratio was just 0.37% last year despite record sales
- Online retail sales growth hit 13-year high in 2020
Amazon’s UK business rates tax to turnover ratio was just 0.37 per cent last year despite it raking in nearly £20 billion, according to research published earlier this month by real estate advisor Altus Group.
Throughout 2020 Amazon saw UK sales rise 51 per cent to around £19.3 billion, putting the UK on course to become Amazon’s second largest market.
Despite such impressive profits, the retailer paid a business rates tax of around £71 million on its entire UK estate including fulfilment centres, research and development centres, corporate offices in London, Amazon Lockers, Whole Foods Market stores, and delivery stations, which represented a tax to turnover ratio of just 0.37 per cent.
Officials at the Treasury are also believed to be meeting tech firms and retailers this month to discuss how an online sales tax would work.
The Covid pandemic and the dramatic increase in online shopping it prompted allowed the UK’s ecommerce sector to experience the highest online sales growth in 13 years.
Total online retail sales growth for 2020 was up 36 per cent year-on-year – the highest annual growth seen since 2007, according to the IMRG Capgemini Online Retail Index.
The meetings come ahead of the March 3 budget announcements, which will likely focus on more short-term relief for the UK, as it continues to combat the knock-on effects of coronavirus and lockdowns.
Neither tax rise is expected to be introduced in March, but senior government sources speaking to The Sunday Times said the increases could form a centrepiece of efforts to cut Britain’s debts in the autumn.
In July 2020, Chancellor Rishi Sunak was reportedly considering an online sales tax to raise £2 billion a year in an effort to “save” the UK high street in the wake of Covid-19.
At the time the government was thought to be considering a two per cent levy on online sales as well as a charge for online deliveries, in order to generate a “sustainable and meaningful revenue source for the government,” The Times reported last year.
“He does accept that the way we tax online sales at the moment is killing the high street and something needs to be done on it,” a close ally said, speaking to The Sunday Times this week.
The so-called “Amazon tax” would likely come as part of a reform of business rates, which have been suspended for many firms and are subject to a Treasury review.
A leaked email cited by The Sunday Times showed the Treasury has asked the Confederation of British Industry and TechUK to contact companies to discuss the “overall risks and benefits” of such a tax, the “effects on business” and “wider customer and macroeconomic impacts” later this month.