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As committed to at Autumn Budget, the UK government has
published a consultation to explore arguments for and against
an Online Sales Tax (OST)
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Consultation follows concerns reported by businesses of a
potential tax imbalance between in-store retailers and online
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Whilst no decisions have been made on whether to implement an
OST, consultation will look at potential designs and impacts
on consumers and businesses of implementing such a tax
The consultation was committed to at Autumn Budget as part of the
government’s conclusion to its review of business rates, where
stakeholders, including some of the UK’s most well-known high
street businesses, called for an online sales tax to help
rebalance the tax system through funding a reduction in business
rates for the retail sector. Given the significant changes in the
retail market and shift online, it is right that the government
reassesses the taxation of this sector, although no decision have
been made yet as whether to implement such a tax.
Today the government has delivered on that commitment.
, Financial Secretary to the
Treasury said:
We want to see thriving high streets and a fair economy as we
move forward from the pandemic, which is why our business rates
review cut the burden by £7 billion for businesses, and committed
to look at an Online Sales Tax - given the imbalance identified
by some between online and in-store retailers
Whilst we’ve made no decision on whether to introduce such a tax,
it’s right that, given the growing consumer trend to shop online,
we work with stakeholders to assess the appropriate taxation of
the retail sector.
As part of the three-month consultation stakeholders will be
asked for their views on the challenges on the design of an
Online Sales Tax, including which products and services would be
in scope and whether it would be a flat-fee tax based on the
number of transactions or deliveries, or a revenue-based tax.
The consultation delves into what effect an Online Sales Tax
would have on consumers and businesses alike, which will also be
a key determining factor in policy decisions.
The UK government has supported retailers over the entirety of
the pandemic through our economic support plan worth around
£400bn, including through tax cuts such as business rates and VAT
relief, funding via business grants and loans, and wage support
through our world-leading furlough scheme.
The Autumn Business Rates Review further supported the high
street, reducing the rates burden by over £7 billion, and making
the system fairer, including through more frequent revaluations,
freezing the multiplier and cutting business rates in half for
the retail, hospitality and leisure sector for 2022-23.
Further information
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The consultation will run from 25 February to 20 May 2022
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The government recognises that an array of business models
operate in UK retail, which is a mark of the vibrant and
innovative sector. It also recognises the value of lively
high streets and town centres to the local communities as
places to live, work, and visit.
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Whist no decisions have been made yet as to whether to
proceed, if implemented, revenue from such a tax would be
used to fund reductions in business rates for retailers with
properties in England and fund the block grants of the
devolved administrations in the usual way
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Should the government proceed with an Online Sales Tax, the
precise nature of associated business rate reductions will be
considered at a later date
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This is a complex issue, and therefore it is right that the
government looks in detail at the policy options before
making a decision
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Read the online sales
consultation
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Read the business
rates review final report
