Chancellor Rachel Reeves and UK minister are desperately seeking to strike a deal with the White House to carve the UK out of the Donald Trump’s plan to impose tariffs on all US imports
Rachel Reeves has failed to rule out the prospect of changing or ditching a tax on US tech giants in an attempt to avoid Donald Trump’s tariffs.
The Chancellor insisted the UK government believes “it is the right thing that companies who operate in the UK pay their taxes in the UK”. But she added: “We are in discussions at the moment around a whole range of things around tariffs with the US.”
It comes as Ms Reeves desperately seeks to strike a deal with the White House to carve the UK out of the President’s plan to impose huge tariffs on all US imports. Jonathan Reynolds, the Business Secretary, also held talks in Washington last week.
Reports over the weekend suggested the UK was in discussions with the US about slashing or abolishing the Digital Services Tax in an attempt to swerve tariffs before April 2. The 2% levy hits major social media firms such as Meta and online sales companies including Amazon and raises hundreds of millions of pounds a year.
Lord Peter Mandelson, the UK’s Ambassador to the US, told the FT the “tax itself is under discussion” with a variety of options on the table beyond scrapping it completely.
Asked whether she is looking at changing or ditching the levy, Ms Reeves told the BBC’s Sunday with Laura Kuenssberg: “It’s the right thing that companies who operate in the UK pay their taxes in the UK. The US government and tech companies understand that as well. We are having discussions with the US at the moment, I want to preserve free and open trade.”
Pressed again, she added: “We are in discussions at the moment around a whole range of things around tariffs with the US. But we will continue to operate on that principle – you should pay taxes in the country in which you operate. That’s really important for UK-based companies that they don’t face an unfair disadvantage from companies that aren’t paying their taxes in Britain.”
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But the Liberal Democrat Deputy leader Daisy Cooper told the BBC : “I’m deeply concerned the government may even be considering reducing the Digital Services Tax. This is a tax wielded on 20 of the largest online social media giants and search engines.”
She added: “Millions of people are feeling deeply anxious about the Government’s cuts to support for disabled people and the impact they will have. If the Government goes ahead with slashing taxes for the social media giants whilst cutting welfare for millions of the most vulnerable, it would be tantamount to robbing disabled people to appease Musk and Trump.” Instead, the Lib Dems are pushing for the tax to be tripled from 2% to 6%.
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