Following the growth online retail shopping, various business leaders and council representatives are mounting pressure to save UK high streets. July 2020 saw the UK treasury begin to review business rates with an aim to reduce the burden on high street shops and to create a more level playing field within the retail sector.
This retail data comes at a poignant time as UK government continues to debate as to whether or not online retailers should be subject to an online tax to bring retailers more in line with those of its counterpart who pay rates in bricks and mortar stores. During April, the UK government introduced the “digital services tax” to raise money from internet companies such as the likes of US based tech giants, Google, Facebook and Amazon.
According to IMRG and Capgemini, online retail shopping was up by 33.9% year-on-year during June 2020. Sparked by the COVID outbreak, online retail purchases outshone itself – a new twelve year high, since March 2008. However, with the average UK retailer selling 183k per year, 3 quarters of which is made offline, online retail income is still relatively low.
Whilst the business rate review is likely to continue until spring 2021, an alternative option could see capital values tax charged to the owner of the property rather than the retailer.
New sales tax and delivery tax
In the meantime, there is also the possibility of the introduction of two types of UK taxes being implemented within the online retail shopping sector. If they come into effect, these will be known as Sales Tax and Delivery Tax.
The Sales Tax is likely to be set at 2% and will be charged when selling goods. The dilemma for online retailer’s is should they absorb the cost or add it onto the price for the consumer to pay? Alternatively, a consumer Delivery Tax could be the answer. Consumers are used to paying for delivery especially if they want it same day or next day and so using this method would pass the cost over the consumer without too much surprise. Secondly, consumers would still have a choice not to pay it if they wished to collect from store, which subsequently would encourage them back to the high street.
Are you operating an online retail shopping UK based business and sending goods overseas? Here at Crendon Insurance we supply online retail insurance to companies and digital ecommerce providers such as independent online retailers, Amazon FBA retailer and managers of dropshipping services. To find out how we can support your business further with online retail insurance and other related services, please contact our team.
Blogs used to write this article: