Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps she is taking to reduce differences between the level of tax applied to (a) physical and (b) online businesses.

To provide stability and predictability to both physical and online businesses, the government published its Corporate Tax Roadmap at Autumn Budget 2024. The roadmap committed to maintaining the main rate of Corporation Tax at 25%, which is the lowest in the G7, as well as a maintaining the UK’s generous R&D tax reliefs and world-leading capital allowance offer.

The Government also wants to ensure that the business rates burden is permanently rebalanced. That is why we have announced our intention to introduce permanently lower tax rates for retail, hospitality, and leisure properties, with rateable values (RVs) below £500,000 from 2026-27. This permanent tax cut will ensure that they benefit from much-needed certainty and support.

We intend to fund these through introducing a higher multiplier for the highest value properties – those with RVs of £500,000 or above. These high-value properties cover the majority of large distribution warehouses, including those used by the online giants.

The final design of the new business rate multipliers, including their rates, will be set at Budget 2025 so that the Government can take into account the upcoming revaluation outcomes, as well as the economic and fiscal context.

To ensure that digital services providers pay their fair share of UK tax, the UK introduced the Digital Services Tax (DST) which is a 2 per cent tax levied on search engines, social media platforms, and online marketplaces to reflect the value they derive from UK users.