Key facts
- Chancellor John Healey is reportedly planning a £1 billion tax crackdown on online marketplaces.
- The initiative aims to fund tax cuts for high street retailers.
- Online marketplaces would be made responsible for collecting VAT from retailers with annual turnover over £90,000.
- The plan targets foreign retailers avoiding VAT on sales.
- The Institute for Fiscal Studies warned the budget risks being a 'work of fiction' without plans to cover £35bn in spending pressures.
UK Chancellor John Healey is reportedly preparing a £1 billion tax crackdown on online marketplaces, such as Amazon and eBay, to fund tax breaks for high street shops. The proposed measure would hold online marketplaces responsible for collecting VAT from third-party sellers with an annual turnover exceeding £90,000, aiming to capture tax from foreign retailers who have exploited regulatory gaps.
The move comes as pressure mounts on the government to provide relief to struggling high street businesses ahead of the October 28 budget. The Institute for Fiscal Studies has cautioned that the budget could be unrealistic without plans to address £35 billion in spending pressures, suggesting either increased funding or significant real-terms cuts.
In a positive note for the Treasury, the International Monetary Fund has revised its UK GDP growth forecast for the year to 1.3%, an increase of 0.3 percentage points. However, the IMF also advised the chancellor to maintain fiscal discipline and continue repairing public finances.