Spending online reaches record proportions

Featuring John Endacott | 10th August, 2018

New figures from the Office for National Statistics (ONS) reveal spending online continued to increase to reach a new record proportion of all retailing at 18.2% in July 2018 with nearly £1 in every £5 now being spent online.

The desertion of the high street by shoppers has been well documented in recent months with House of Fraser being bought out of administration by Mike Ashley of Sports Direct last week and Homebase announcing plans to close stores. Poundworld, Maplin and Toys R Us have all gone bust this year, with several other groups such as Mothercare, Carpet Right and New Look undertaking store closure programmes.

In the UK, ecommerce has grown steadily, reaching £137.38bn last year, according to ONS data. Globally in pure monetary terms the UK is spending the most online with an ecommerce spend per capita at £3,163, which more than doubles that of renowned ecommerce giant China. By 2040, it is thought 95% of purchases will be facilitated by ecommerce (Nasdaq)

The online shopping phenomenon has led calls from traditional high Street retailers for a tax on internet retailers and reforms of business rates. The move follows reports that Philip Hammond is considering an online transaction or ‘Amazon tax’ on web retailers to ‘level the playing field.’

John Endacott, Head of Tax at PKF Francis Clark and a Council Member of the Chartered Institute of Taxation said:

“There are arguments in favour of an online transaction tax. The growth of online sales means higher recycling and refuse costs for local councils without a contribution from business rates. Delivery couriers used by online companies will also pay national insurance at lower rates than shop workers.

“Phillip Hammond previously tried to adjust national insurance rates but was forced to back down, but he may return to the taxation of the gig economy in the forthcoming Budget.”

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