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Extra Tax coming for UK online business

Thursday 19th May 2022

How will an Online Sales tax being looked into by UK Government affect our business. Our response.

Today I found out that the UK Government is looking to support the UK high street not by reducing business rates on shops but by adding an extra 'online sales tax' (OST) to the likes of our online business. Read about it here from this BBC News article. As many of our customers have small online businesses I felt this was important to produce a blog about. If you feel you want to add your voice then please do so.

The Government is encouraging feedback to assess in what form this OST will take so I have today sent my response to it as it is my feeling that we should participate in the debate as well as be critical.

Here is a copy of the text I sent today that outlines our feeling.

I wish to put very briefly why an extra online tax will cause harm to my business and could mean no gain for the treasury in my instance.

Hippy Motors has been selling our unique decals online for close to 20 years. We have seen the online selling market boom around us over that time as we helped, in many ways, pioneer e-commerce. Our products we make to order so, as such we are a craft based business. We have invested heavily in being carbon neutral and are the only carbon neutral decal manufacturer in the world assisting in the NetZero target for yourselves.

We are small and have, in the past, worked hard to stay small as growing into a large business was not our desire. Our business model has been to keep only ourselves self employed (myself and my wife) restricting our business to be below the VAT threshold, working from home as a partnership which has seen us survive when others have come and gone around us.

It is a stunningly simple business model that has kept our family fed and warm for nearly 20 years. We are not a greedy business as work is about being self-sufficient.

Regarding your proposal for an extra online sales tax...

In a nutshell, if we are asked to add an additional tax onto our online sales then, in my case, you'll gain a percentage of our turnover but loose that percentage in income tax we pay. I also guess that'll be the case in most cases of online sales just reducing taxable profit.

It is unlikely that a small tax will result in us increasing prices so it will reduce profit with reduces our income tax.

I, therefore, ask yourselves if taxing our operation is advisable as, it seems, the treasury will not gain anything in doing so but just further increase bureaucracy.

I wish to add that not all online sales businesses are booming at the moment. Our business model has always been truly global with maybe just under 50% of sales being international because our products really are unique which, we feel, is an extra boon to the UK economy. Being international our operation is still suffering significantly from BREXIT. We lost around 1/3 of our turnover as soon as we left the EU and Europeans are still clearly reluctant to order from UK businesses. That has been a major blow to us and many other businesses and, as such, incredibly difficult to deal with and a hardship inflicted on us by your government. With that in mind I do fear that an additional tax will be painful to our beautiful business, and many more like us, and have actually no gain to the treasury and therefore no-one so I ask yourselves to consider smaller, craft based sole trader operations below the VAT threshold in your online sales tax carefully.

May I respectfully ask the treasury chase the many corporations and individuals that openly avoid UK tax first before getting more for us hard working folks that can be seen as easy targets by tax revenue collection departments.

Thank you for the consideration on this important matter,

Matt and Angela Whittaker

Partners Hippy Motors”

If you feel motivated then please go here to the UK Governments website where you can find out how to contact the OST team.

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