UK weighs £1bn online marketplace tax collection plan

John Healey is preparing a reported £1bn tax crackdown on online marketplaces, with revenue expected to fund business rates cuts for high street shops. The proposal is expected to be set out at the Budget later this month.

Under the plan, platforms such as Amazon, eBay and Temu would collect VAT at source for sellers with annual revenue above £90,000, according to The Times, as reported by City A.M. The policy is intended to address concerns that foreign retailers use UK shell companies to avoid VAT.

Amazon estimated the measure could raise about £700m for the Treasury, below the government’s own estimate. The company said it supported closing the loophole.

The Chancellor is also said to have ruled out a tax on warehouses. Retail leaders had warned that such a tax could raise costs for retailers using the sites and, in turn, prices for consumers.

Dan Neidle, founder of Tax Policy Associates, said the proposed threshold could leave room for the loophole to continue. He told The Times that the Treasury should make platforms responsible for collecting VAT on all sales made through them.