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  • Writer's pictureRuori McMahon

Online Sales Tax: Businesses need a level playing field.

We’ve spoke a lot about your April business rates bill, and options you can look at to reduce it.

But there’s growing outcry amongst many business owners, especially retailers on the highstreet. There are calls being made for real business rates reform in order to justify the cost of trading from a physical premises.

Of all the suggestions being made, perhaps the most prominent is the introduction of an Online Sales Tax (OST), where proceeds could go towards business rates reduction on a national level.

Many say that this could help level the playing field between physical and online retailers once more, as business rates add significant cost to trading on the highstreet. On average, business rates come in as the third-highest overhead for those that are liable, a premium that online retailers are free from.

There's nothing set in stone regarding the implementation of an OST, and it is expected that the public will hear more about it in the Autumn 2022 budget. But so far reception is fairly positive. All retailers with no digital business model were in favour of an OST, as were 71% of highstreet retailers that also have an online presence.

This is interesting, given the relatively impartial standing that hybrid business models have when compared to purely highstreet or online businesses. However, if an OST were to be implemented, it shouldn’t be there just for the sake of penalising online retailers. What will make the difference between an OST that’s fair for business owners however they trade, and one that's not, is in its implementation.

Currently, there are a variety of different ways to reduce or mitigate your business rates. With the review of a specialist surveyor, your business could qualify for different reliefs or schemes that operate, relative to your rateable value. This can result in significant reductions on your business rates bill. In some cases, a robust, comprehensive review can leave you exempt from paying any business rates at all.

Any online sales tax that's implemented here in the UK should have similar allowances included; reliefs that allow small businesses to thrive without impeding their growth, and break periods for when uncontrollable factors result in times of financial hardship. The money raised through an OST needs to go straight back into keeping business costs down for everybody, further stimulating the economy.

As it stands, there’s much speculation around a considered online sales tax and no concrete evidence for how or even if it’s going to be implemented. At any rate, we don’t expect to see any form of reform within this rating period, which ends in less than a year.

The major concern here is that many rate-paying business owners will lose out on their own savings while waiting for systematic change. Any historical overpayments made from 2017 cannot be reclaimed if an appeal is not made by March 2023. And many business owners aren’t aware that they could be paying more than they should be.

We tend to keep up to date with all things business rates, so if you have any questions, leave your contact details and we’ll get back to you. Or give us a call on 0800 059 0996. Thanks for reading!

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