eBay warns crackdown could hurt small UK firms
The UK government faces pressure to ensure small businesses are not unfairly penalised if it proceeds with plans to reform tax collection on online marketplaces, eBay’s chief has said.
Tax proposals for marketplaces
Chancellor John Healey is reportedly preparing to announce that online platforms would be responsible for collecting VAT on sales made by all retailers using their services. The current system only requires platforms to collect tax from overseas sellers, but officials say some foreign firms use shell companies to avoid these rules.
Under the proposed changes, platforms would collect VAT for all retailers on their sites with an annual turnover above £90,000, regardless of where the business is based. The measure is expected to raise up to £1 billion and is intended to help reduce business rates for physical stores on high streets.
Protection for small sellers
Eve Williams, Vice President and General Manager at eBay UK, told the Treasury that it was important to protect domestic small businesses. She said the company had held discussions on how to safeguard growth and ensure the changes do not harm small enterprises.
Williams noted that tight thresholds often hinder growth, particularly around VAT and national insurance payments. She argued that any new rules must be designed to avoid putting people off starting or expanding a business.
Regional economic disparity
An eBay report highlights how the potential of small businesses is held back by productivity gaps and regional imbalances. The research found that 31 of the 40 areas with the highest concentrations of eBay small business activity in the UK have a gross domestic product per head below the national average.
She suggested that measures like increasing the trading allowance could help. The current UK tax exemption allows individuals to earn up to £1,000 per tax year from self-employment tax-free. Williams called for raising this allowance to £3,000 to make it easier for people to test business ideas and start earning money.
Local growth strategies
Ahead of the Budget on 28 October, the report called on ministers and regional mayors to place small online businesses at the centre of local growth plans. The aim is to attract new investment and help existing small enterprises develop.
