Budget 2018: the chancellor announced that the UK will proceed with a Digital Services Tax from April 2020.

The new tax will be based on 2% tax of revenues of certain large digital businesses which derive value from their UK users.

It will apply:

  • To revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces;
  • To revenues from those activities that are linked to the participation of UK users, subject to a £25m per annum allowance;
  • Only to groups that generate global revenues from inscope business activities in excess of £500m per annum.

It include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins. 

Useful links:

Budget 2018 live highlights

Budget 2018 summary

External link

HMRC Digital Services Tax