Budget 2018 – Updating the tax system for the digital age

A UK Digital Services Tax service will be launched by April 2020, raising £400m a year.

This afternoon’s budget saw the chancellor introduce the “narrowly targeted tax of the UK revenues from digital business models.”

The Chancellor stressed that the tax was not aimed at online sales goods, but was instead aimed at profitable firms with at least £500m in global revenues.

Hammond said: “We are serious about this reform. It is only right that these global giants with profitable business in the UK pay their fair share towards our public services.”

He added that it would mean that tax avoidance could be clamped down on and that it was about “updating the tax system for the digital age.”

Hammond said that he would also like the HMRC the preferred creditor of payments for insolvencies.

He also announced a new tax on the manufacturing and importing of packaging which has more than 30% of plastic within it. He said he had considered a levy on disposable plastic cups but a tax in isolation would not deliver a decisive shift from disposable to reusable cups.

The Chancellor also introduced new mandatory business rates for public lavatories, whether publicly or privately owned. Hammond also said  the government were to extend changes to the way self-employment status is taxed, from the public sector to medium and large private companies, from 2020.

Lawrence Jones, founder and chief executive of Manchester based UKFast, said: “The Chancellor talks of the hard work of the British people, but the hard work of our businesses and workers is completely undermined when we lose billions of pounds in tax revenue from the US tech giants.

“It’s way beyond time for action on the pitiful amount of tax paid by the likes of Facebook, Amazon and Google, so I congratulate the Chancellor on taking this first step. If all UK businesses took advantage of the tax rules that apply to off-shore businesses, the country would collapse. It’s the tax-paying entrepreneur that props up this country and it’s time for these tech giants to pay their share.

“As business leaders we have a responsibility to give back to the country and to nurture the community around us. I look at the UK’s booming tech industry and I’m proud of the way we are able to contribute, but it has to be a level playing field if we want to achieve the strong digital future that Hammond wants to see.”