The UK Government’s proposed tax on online sales could have a significant impact on travel businesses, according to accounting company RSM.
The proposal, whose first parliamentary consultation ended on Friday, is expected to level the playing field between physical and online retailers, as well as bringing down the cost of rentals.
According to RSM UK’s head of travel and tourism Ian Bell, a lack of understanding over how this will work out in practice could put the travel sector at a disadvantage.
“If services are included within the scope, then online travel agents and some tour operators may find themselves liable for a new tax in the years ahead,” Bell explained.
“Businesses will need sufficient warning of the introduction of any new taxes given that seasonal commitments and pricing are often set many months ahead.”
Bell argued that there are still a lot of questions regarding how the tax will be implemented, and especially if it will be applicable to both business to business (B2B) or business to consumer (B2C).
“The sector is hoping for a bounce back this year after the removal of travel restrictions and making the most of the pent-up demand for holidays post-Covid,” Bell continued.
“However, this boost could be hampered by the cost of living crisis, so the last thing the sector needs now is the threat of additional taxes.
“With current economic headwinds, the cost of living squeeze and pandemic savings being depleted, there are already fears that next year could be a tough year for the industry.”