// High street retailers face potentially higher taxes if the government imposes a charge on online sales
// The Treasury is reviewing the future of business rates and is due to report its conclusions in autumn
// The current year-long relief from the tax is likely to be extended
Some of the UK’s biggest high street retailers reportedly face potentially higher taxes if the government imposes a charge on online sales to fund a reduction in business rates.
Fashion retailer Next, electricals group Dixons Carphone, cycle retailer Halfords and department store chain John Lewis could end up paying more if a tax on ecommerce were implemented.
The Treasury is reviewing the future of business rates and is due to report its conclusions in autumn, Financial Times reported.
READ MORE: Government working on “excessive profits tax” for online retail giants
The current year-long relief from the tax is likely to be extended.
One of the options for reform is a tax of about two per cent on sales made online.
Taxing online sales would benefit retailers such as Primark, Aldi and B&M, which do not sell online but have large store estates.
However, online-only retailers such as Amazon would attract tax of £380 million at two per cent — many times the estimated £19 million reduction in its rates bill.
Ecommerce now represents more than 60 per cent of John Lewis’ revenue, compared with 40 per cent before the Covid-19 pandemic struck.
Next’s annual business rates bill would drop from about £115 million to £80 million if the multiplier were reduced to 35 per cent.
However, a two per cent tax on its online sales — £2.15 billion last year — would more than cancel out that saving.
Meanwhile, Dixons Carphone would also see any savings from a business rates reduction cancelled out by a two per cent tax on online sales.
Nevertheless, Big 4 grocer Tesco has suggested a one per cent levy, while Marks & Spencer has advocated increasing corporation tax to fund a cut in business rates.
Next chief executive Simon Wolfson has called for higher business rates applied to the warehouses that online-only players depend upon.
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