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Review business rates for online retail

To ensure the system is sustainable for the future we will also conduct a full review of the business rates system to make sure it is up to date for a world in which people increasingly shop online.

Our Verdict

This policy is aimed at making the taxation system fairer for all businesses by ensuring that online businesses pay a “fair” amount of tax. It is one in a series of policies aimed at the digital economy.

Currently, the issue is that many online businesses either do not have to pay business rates or pay a relatively low business rate. But why does this happen? Business rates are based on the value of a business property. An online business can locate itself in a lower cost area where the property is less expensive and hence pay a lower business rate. On the other hand, business rates are higher for regular businesses because they need to locate themselves in a busier, higher cost area such as the high street in order to attract customers.

So what’s happened? The government has promised to review business rates more frequently, but this isn’t something that will address business rates for online retailers. We have had no specific action on this, though we do know that the Chancellor is still considering it, the high-street retailers still want it, and online retailers still don’t.

But without evidence of official government action to progress this, we’re marking this as ‘not started’. Follow this policy for updates.

Review the detail…

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