United Kingdom moves on introducing digital tax ahead of EU

Philip Hammond will unveil a commemorative Brexit coin to mark Britain's departure from the EU it has been

An artist impression of what the Brexit coin might look like

The UK is to hit tech giants such as Google, Facebook, Amazon and Apple with a new digital services tax from 2020.

It is created to target established tech giants which are profitable and which generate at least £500m a year in global revenues.

The higher rate was already much lower in Scotland, at £43,430, and if there are no changes in the upcoming Scottish budget it would mean that someone earning £60,000 would pay £1,660 more in income tax if they live north of the border.

Tech companies that generate more than £500 million a year in global revenue will be the targets.

The tax would come into effect in April 2020 following a consultation, Philip Hammond stated in his 2018 Autumn Budget yesterday (29 October).

Hammond said a global agreement remains the "best long-term solution", but the U.K.is moving forward with its own tax amid slow progress in those talks. We can not simply talk forever.

The chancellor also suggested that a Brexit deal could trigger more tax cuts and increased public service spending.

Revealing the tax in Parliament, Hammond said that it will be "carefully created to ensure it is established tech giants - rather than our tech start-ups - that shoulder the burden of this new tax".

A 2% tax would be applied.

The tax is projected to yield £5 million in 2019/20, but will steadily increase to around £440 million in 2023/24. "The Chancellor must promise that the new digital services tax will not morph into an online sales tax in the future".

Amazon, Google, Facebook and other technology behemoths could be hit by a new tax in the United Kingdom.

Hammond highlighted that the looming digital tax would not be an online sales tax on goods purchased online. Hammond said that the government expects to raise more than £400 million ($512 million) annually based on current revenues.

The government has always been scratching its head for ways to address the current tax treatment of global tech platforms.

As expected, the chancellor has announced that the amount that online betting companies must pay has been increased.

And the tax cut will be backdated to anyone who has bought a shared ownership home since last year's budget. It's a problem the European Commission has been looking to address with proposed tax reforms to include an interim tax of three percent on selected and currently-untaxed digital activities.

Mr Johnson said that the rise in income tax thresholds announced by Mr Hammond would benefit the wealthy more than those less well-off and, despite a cash injection into the controversial Universal Credit benefit scheme, there will still be "millions of losers" due to it.

Latest News