Ministers are reportedly preparing to announce a tax crackdown on online retailers as part of the chancellor’s plan to deliver a budget for the “white van man” and the “high street beautician,” reports BritPanorama.
John Healey is reportedly looking at ensuring that multibillion-pound online marketplaces such as Amazon, eBay, and Temu will be made responsible for collecting tax owed by retailers selling on their platforms.
The policy, reported by The Times, will primarily target foreign sellers who abuse the rules to evade paying VAT. It is expected to raise as much as £1 billion, funds that will be used to cut business rates for high street shops.
A Treasury source told the newspaper that one of the chancellor’s priorities is to “protect local family businesses and the high streets we love.”
“That means having the beauticians and white van drivers of our towns at the forefront of his mind as the budget draws nearer,” the source added.
The initiative comes amid growing concern that Chinese retailers are using online marketplaces to undercut British competitors by evading the 20 per cent VAT on all their sales.
The new rules would see online marketplaces responsible for collecting VAT at source for all sellers who have an annual turnover of more than £90,000.
Tax expert Dan Neidle, founder of Tax Policy Associates, welcomed the tightening of the rules but cautioned in The Times that the system could still be exploited.
“This is a step in the right direction but the Treasury needs to do more and make online marketplaces responsible for collecting every penny of VAT on the sales made on their platform,” he said. “Unless that happens these Chinese sham companies will find just another way around the rules.”
Mr. Healey faces increasing pressure to raise taxes or cut spending at next month’s Budget, as soaring borrowing costs because of the Iran war and weaker growth have wiped billions off the government’s fiscal headroom.
However, despite the bad news, new forecasts from the International Monetary Fund showed that the rise of artificial intelligence is driving economic growth in the UK, providing a boost to Mr. Healey ahead of his first budget.
The report indicates that Britain’s economic outlook has improved more than almost any other major economy over the past six months.
In its latest World Economic Outlook, the IMF stated UK GDP is set to grow by 1.3 per cent in 2026 — an upgrade of 0.5 points from its April forecast, despite the energy shock triggered by the Iran war lasting longer than expected.
A Treasury spokesperson remarked: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
