How has the budget affected Britain’s Retail sector and the battle for the e-commerce sales tax.

03 Mar, 2021 . 4 minutes



It won’t be a surprise to anyone that the high street retail sector has been hit hard by the pandemic which has shone a light on many areas that needed addressing. Today’s budget has seen some encouraging announcements voiced by the Chancellor in acknowledging this as the sector tries to bounce back with the forthcoming easing of lockdown restrictions.

There has been an extension to the furlough scheme until the end of September with the government contributing up to 80%, along with the recovery loan scheme. Business rates relief for retail, hospitality and leisure firms has been extended until the end of June and for the remaining nine months of the fiscal year they will still be discounted by up to two-thirds helping the market to get back on its feet. However, it’s not all positive as enterprise retailers will have noted higher corporation taxes from April 2023 to increase to 25%. Still the lowest in the G7 we are assured. We didn’t get another ‘eat out to help out’ or other consumer spending initiatives which would have given both confidence and incentives to shoppers and diners to hit the high street once it reopens. It will be interesting to observe what measures other economies introduce in this respect. Nor have we seen a now well overdue desire to create an even playing field with e-commerce sales tax and high street sales tax. This is a really complex issue and one that was always unlikely to be resolved in the latest budget. This is something that the Treasury has been exploring in response to the explosion of online sales since the pandemic begun and the closure of high street shops.

It is felt in Whitehall that an online sales tax, which would involve a new levy on internet shopping, could help slow down the end of the British high street. However, the British Retail Consortium have expressed their opposition to this, arguing that it would hit high street retailers with online operations and could result in the consumer paying the bill in a time of austerity. Several large retailers such as Tesco, have previously backed the move of an online sales tax and given the fact the Chancellor is supportive, we may see this in the autumn.

Online shopping now accounts for 30% of overall retail sales in Britain, up from about 20% a year ago. With people staying at home during lockdown, Amazon UK sales rose by 51% in 2020 (£19.4bn). Despite some temporary relief for Britain’s retail sector, there are still many long-term issues ahead as consumer behaviour is likely to have shifted, time will tell as the high street prepares to re-open its doors.

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By Mike Evennett

VP Sales

APEXX Global




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