John Lewis and Next at threat of paying higher taxes

business rates online tax covid-19 pandemic lockdown
Taxing online sales would benefit retailers such as Primark, Aldi and B&M, which do not sell online but have large store estates
// 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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2 COMMENTS

  1. Why? Whats wrong with not having stores? Rates is in dire need of reform, moving all your profit off shore before paying any tax should be ended, but why penalise someone for having a different, but equally legitimate tax paying business here in the UK?

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