AUTUMN STATEMENT Online sales tax shelved – with business rates on large ecommerce distribution warehouses set to rise 27% instead - Internet Retailing – I dont know how more are not talking about this today - seriously impactful
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Can you translate this for us in the States? Here in the US taxes have balanced because all states have yearly thresholds for sales tax rates (that most people were avoiding before but now cannot).
The UK govt was going to impose a standalone tax on online transactions - there is a feeling that online has unfair advantage. That has been scrapped. But they are imposing a rate hike. The rate is directly linked to the value (size) of their property and done on a per sq M basis - this cost hike will result in higher fixed cost of (holding stock, moving stock, utilities etc) Basically all business using 3PL will have this cost passed on to them from April next year. It will huge impact IMO.
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I wonder if this will impact companies that are using “self storage” sites for their ecommerce microbusiness. There has been previous legal precedent that rented self storage space can’t be assess for business rates–a property tax–of a company trading from that space (the self storage company pays business rates on their business of renting storage, no doube dipping for tax purposes)
Also on the tax front: UK made a change a few years ago on employment taxes for people who are IT contractors operating a sole contractor business. The change was designed to reduce legal tax avoidance for “disguised employees”, which some contractors were (always working for same customer, at direction, with no equipment of their own etc.) These are called the IR35 rules, and there is a automated flow chart on HRMC website to assess whether you were in scope (which would create tax impacts for both contractor and customer, usually requiring the contractor to use an “umbrella” company to protect customer, and pay higher taxes through the umbrella, even if they had their own Ltd. personal service company for tax and liability reasons–most did). Tradespeople like plumbers were clearly out of scope (use own tools, could send another person in their place to do the job etc.) but very much impacted knowledge workers especially ecommerce.
Chancellor KKs brief budget was going to relax the IR35 rules for many contractors to encourage growth, but I think Chancellor JH budget maintains the current status quo.
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