UKHospitality Calls for UK Online Sales Tax

In its response to the Government’s consultation on the introduction to an online sales tax, UKHospitality says that due consideration must be given to property-based industries such as hospitality.

The trade body’s submission also calls for such a tax to be ear-marked to provide a targeted reduction to business rates for high street businesses. Business rates remain one of the biggest barriers to recovery for operators looking to rebuild following the pandemic, and the current system results in the hospitality industry overpaying by £2.4bn each year – an overpayment of 300% relative to its turnover.

An online sales tax must involve exemptions for services that are ordered online but involve delivery from a physical presence that delivers that service in person, for example hotel bookings and restaurant deliveries, so as to avoid a stealth ‘double-taxation’.

While UKHospitality says an online tax should also be based on revenue through relevant online sales, it also specifies that the system must be designed with an allowance below which no tax is levied. It also calls for rates reductions to be achieved via a reduced multiplier for all relevant businesses and not focused solely on smaller businesses, as this is done through the Small Business Rate Relief.

UKHospitality Chief Executive, Kate Nicholls, said: “We are calling for an online sales tax to be introduced in the UK to cut business rates for high-street venues and deliver economic regeneration across the UK.

“The basis for an online sales tax must not stifle innovation and the development of online business models but must support our British high streets. This is why Government must ensure that an online sales tax avoids double taxation for businesses that deliver product on-premise, such as pubs, restaurants and hotels.

“The taxation system has lagged way behind the changes to the modern economy and while we have long known that business rates is arcane and outdated, there is also an absence of an equitable system of justifiably bringing the digital economy into taxation.”