UK Hospitality calls for online sales tax

Taxing online sales to reduce business rates for the hospitality sector would help bars and restaurants overcome ‘one of the biggest barriers to recovery’.

Trade body UK Hospitality is urging the UK government introduce an online sale tax to support property-based industry, such as the on-trade.

UK Hospitality noted how the current rules mean the hospitality industry is ‘overpaying by £2.4 billion [US$3bn]’ annually – an overpayment of 300% relative to its turnover.

The trade association noted, however, that an online sales tax must include exemptions for services ordered online, but involve delivery from a physical presence, such as hotel bookings or restaurant deliveries.

Kate Nicholls, UK Hospitality chief executive, said: “The basis for an online sales tax must not stifle innovation and the development of online business models, but must support our British high streets.

“This is why government must ensure that an online sales tax avoids double taxation for businesses that deliver product on-premise, such as pubs, restaurants and hotels.

“The taxation system has lagged way behind the changes to the modern economy and while we have long known that business rates is arcane and outdated, there is also an absence of an equitable system of justifiably bringing the digital economy into taxation.”

Earlier this month, news broke that the temporary licences granted during the Covid-19 pandemic, allowing pubs, bars and restaurants to serve guests on pavements, were to be made permanent.