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29 Jun 2023

Bicycle sales slowed sharply in Europe in 2022 after strong growth during the pandemic. But whilst traditional bicycles were less in demand electric bikes continued their explosion, the European...

29 Jun 2023

gogeta says it is set to shake up the Cycle to Work Scheme industry by offering partner bike shops the lowest commission fees in the industry at 4%, with an introductory offer of 3% until 31st...

26 Jun 2023

Transport for London (TfL) has launched a new Cycling Action Plan with the aim of increasing the number of journeys made in the capital by bike by a third by the end of the decade, with...

16 Jun 2023

Giant UK have partnered with Activate Cycle Academy and the Association of Cycle Traders (ACT) to provide a Cytech Technical e-Bike qualification

15 Jun 2023

Hubtiger has been revolutionising service and repair operations for numerous service-based shops with their powerful software. Now, they are thrilled to announce the expansion of their software...

15 Jun 2023

A new and improved traineeship programme for women and non-binary people being implemented by  Bike for Good, which delivers Cytech training in Scotland, is proving successful.

14 Jun 2023

The introduction of a 'death by dangerous cycling' law, proposed by then-Transport Secretary Grant Shapps last year, is unlikely to be passed before the next general election due to a lack of...

14 Jun 2023

ACT Gold Member Don Valley Cycles, dubbed “Doncaster’s favourite” cycle shop, has marked its 30th anniversary in business with a 300-mile bike ride.

13 Jun 2023

E-bike brand Cowboy has launched a retail partner network as it looks to expand its retail and service presence across Europe.

7 Jun 2023

NatWest is launching a software-only point-of-sale (softPOS) solution that will enable merchants in the UK to accept in-person contactless payments on Android NFC smartphones.

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IRC, including the ACT, present position on the introduction of an Online Sales Tax (OST)

Posted on in Business News , Cycles News

The Independent Retailers Confederation (IRC) is a body of 19 trade associations (including the ACT) representing over 100,000 UK-based independent retailers, as such IRC represents the largest community of retail businesses. 

The IRC takes a neutral position on the introduction of an Online Sales Tax (OST) but we want to highlight the varied views of our membership about the design and scope of the new tax. Almost all of our trade association members will be responding to the Treasury consultation.

The IRC has completed polling of retail businesses from across the IRC membership and provided an overview below. We hope this will help the Treasury understand the varied views of independent retailers that trade on high streets and online.

The key conclusions from this research are as follows:

  • There is no consensus view from across independent retailers about the introduction of an online sales tax
  • The majority of our bricks and mortar retailers welcome the idea of OST offsetting business rates costs, which significantly impact their physical premises, but not at the cost of stifling their future online sales
  • If an online sales tax was to be introduced a sufficiently high qualifying threshold needs to be applied, starting at £2million of online sales
  • Click and Collect services must be exempt from the online sales tax because of the important role they play in driving footfall to shops and town centres

The Association of Cycle Traders (ACT) is an active member within the IRC. While we are in agreement with the IRC summary, we found that the feedback from cycle businesses was largely representative of the IBD, and that supply-based businesses in the sector were not as active in survey participation so may be under-represented.

 

Support for Online Sales Tax

In our research, there is disparity amongst various retail sectors with regard to support for an Online Sales Tax. The issues envisaged of OST is it would hinder investment and stifle innovation as many small retail businesses have yet to establish a foothold in the world of online commerce, and those who have already started to make that journey, innovating and investing heavily in their digital capabilities to support their high street presence, are already paying corporation tax, business rates that are higher for businesses located in town centres & high streets, and increasing rents; therefore OST is seen by many as simply another layer of tax and administration they will have to face at a time when business running costs are on a steep climb. Others see the outcome of OST being an additional cost that is ultimately passed onto the consumer, making it more difficult to compete with large retail chains and behemoth online platforms. Small retailers who already sell via third-party platforms are paying increased advertising costs and taxes through those channels, and OST adds the risk of further complicating the tax syste.

Where the majority of retail businesses are closer to alignment is that business rates are in dire need of fundamental reform, and that if OST income was repurposed to offset business rates for small businesses operating from bricks and mortar stores, they could welcome OST.

 

Minimum Threshold

Over the next 3 to 5 years, over 75% of retail businesses expect to be selling online and volume of sales to UK customers is expected to exceed 25%, in some cases, online sales account for a much higher proportion of their sales. If an online sales tax is to be introduced, it is crucial it does not restrict small retail businesses’ ability to establish themselves online and to meet consumer demand for convenience and choice. It’s therefore imperative that an online sales threshold of at least £2m is included, to pave the way for newly established and growing retail businesses, but to ensure that larger retailers and online-only platforms remain in scope of OST, many of the latter who don’t contribute fairly to the UK’s tax already.

 

Click & Collect

Over 40% of independent retailers operate some form of click and collect service, and whilst we appreciate the difficulty in establishing the controls to clearly identify click and collect sales income at point-of-sale, click and collect is a valuable contributor to attracting muchneeded footfall into our towns and communities, as such should be exempt of OST. Click and collect supports sustainability and high street health as the consumers journey down to the shop to pick up an order, increasing the likelihood of turning a collection into a wider shopping visit.

 

Goods, Services & Channels in Scope of OST

Over 60% of retailers believe B2C services connected to the sale of goods (e.g. delivery costs, insurances/warranties) and B2C services unconnected to the sale of goods (e.g. holidays and flights) should also be exempt. The vast majority feel that sales transacted through third-party sales & delivery platforms should be subject to OST.

 

Is OST a Good Idea?

Our research found agreement that a minimum OST threshold could help to rebalance the burden of tax across the industry, generate revenue to reduce business rates for smaller businesses, modernise tax treatment of retail activity, improve the economics of store-based retail and support the attractiveness of our high streets and town centres. It is important however that OST doesn’t hinder retailers’ investment and innovation, nor become too difficult to implement.

For further information about the IRC click here.

 

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