The Taking Control of Goods (Miscellaneous Amendments) Regulations 2026
This draft Bill proposes establishing a levy targeting the turnover of large digital service providers operating within the United Kingdom, specifically those with global revenues exceeding a defined threshold and UK revenues exceeding a lower threshold, imposing a percentage charge on revenue derived from online marketplaces, digital advertising, and certain user-related data services.
The legislation intends to capture revenue generated from UK economic activity that current corporate tax rules may not adequately cover while broader international tax reforms are pending.
Arguments For
The levy aims to ensure large digital service providers, often operating internationally, contribute fairly to the UK tax base based on the value generated within the UK market.
Implementing a domestic tax ensures revenue collection even while international agreements on global minimum taxation are still being finalized, providing an interim solution.
The structure targets only the very largest global firms, minimizing the compliance burden on smaller businesses operating in the digital space.
By focusing on revenue generated from UK users through specific activities (online marketplace, services, and advertising), the tax aims to align taxation with economic activity.
Arguments Against
Companies may argue that this is a unilateral tax that risks trade friction or retaliation from other jurisdictions before international consensus is reached.
The tax is levied on turnover, not profit, meaning companies operating with thin margins or making consistent losses could still be required to pay, potentially discouraging investment.
Digital service providers may pass the cost of the levy directly onto UK consumers via price increases or onto smaller businesses using their platforms through increased fees.
Defining the precise scope of 'turnover' attributable to UK users or transactions in cross-border services presents significant and complex implementation challenges for both the providers and HMRC.
PART 1
The Digital Services Levy
1 Levy to be charged
(1) A levy, to be known as the Digital Services Levy, is to be charged on the turnover of a company that is within the charge to the levy for a given accounting period.
(2) The rate of the levy is 2% of the company’s turnover that is within the charge to the levy for the accounting period.
2 When a company is within the charge to the levy
(1) A company is within the charge to the levy for an accounting period if both of the following conditions are met:
(a) The company’s revenues from worldwide group activities exceed £500,000,000 in the relevant period,
(b) The company’s revenues from turnover within the charge to the levy for the accounting period exceed £25,000,000 in that period.
(2) For the purposes of this Part, “the relevant period” means the group’s preceding financial year for which the company’s audited accounts are available.
3 Turnover within the charge to the levy
(1) A company’s turnover within the charge to the levy for an accounting period consists of the sum of its revenues, for that period, from the following activities carried on by the company:
(a) revenues from operating an online marketplace (activity A),
(b) revenues from an online advertising service (activity B),
(c) revenues from the supply of data relating to users of the company’s services (activity C).
(2) Turnover from activity A is the revenue derived from fees, commissions, or other charges arising from transactions facilitated by the company’s operated digital platform.
(3) Turnover from activity B is the revenue derived from enabling advertisers to display advertisements on the company’s digital properties, including revenues derived from the placement or display of those advertisements.
(4) Turnover from activity C is the revenue derived from the provision or licensing of aggregated and anonymised data gathered from the real-time or historical activities of users of the company's digital services to third parties.
Part 1 establishes the Digital Services Levy, which will be applied at a rate of 2% of the relevant turnover for an accounting period.
A company becomes liable for this levy if its worldwide group revenues exceed £500 million in the preceding financial year and its UK-related turnover within the charge exceeds £25 million in the current accounting period.
Turnover subject to the levy arises from three specific activities: operating an online marketplace (charging fees or commissions for facilitated transactions), running an online advertising service (revenue from placing or displaying ads), and supplying aggregated, anonymised user data to third parties.
4 Charge to tax
(1) The Digital Services Levy is payable by the company that is within the charge to the levy for the accounting period.
(2) The tax is calculated by applying the rate under section 1(2) to the turnover within the charge to the levy for the accounting period.
5 The accounting period
(1) For the purposes of this Part, an accounting period of a company is its relevant accounting period for the purposes of UK Corporation Tax.
6 Interpretation of key terms
(1) In this Part:
“company” means a body corporate or an unincorporated association;
“digital properties” means websites, mobile applications, or other digital interfaces through which the company provides its services or facilitates transactions;
“fees, commissions, or other charges” includes any remuneration received by the company in relation to the facilitation of a transaction, irrespective of the legal or commercial structure of that remuneration;
“group” means a parent undertaking and all of its subsidiary undertakings as defined in sections 1159 and 1162 of the Companies Act 2006.
(3) References in this Part to revenues derived or generated from activities carried on by the company are to revenues properly attributable to the United Kingdom, determined in accordance with guidance issued by HM Revenue and Customs.
The company subject to the levy is responsible for paying the tax, calculated simply by multiplying the defined turnover by the 2% rate.
The relevant accounting period aligns with the company's standard UK Corporation Tax accounting period.
Key terms are defined, clarifying that a 'company' includes corporate bodies and unincorporated associations.
Crucially, revenue attribution for turnover in activities A, B, and C must be assigned to the United Kingdom, based on guidance that HM Revenue and Customs (HMRC) will provide to ensure proper allocation in cross-border operations.
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