The UK Treasury is set to collect a record £900 million from the digital services tax (DST) for the year ending in April, marking its strongest return since the levy was introduced in 2020.
The figure represents a sharp rise from the £700 million collected in the previous financial year and significantly surpasses early forecasts. The 2 per cent levy is imposed on the revenues of search engines, online marketplaces and social media platforms operating in the UK.
Industry data shows that growth in the digital advertising sector, a major contributor to the DST, has fuelled this higher-than-expected revenue. According to IndexBox, online advertising in Britain continues to expand, strengthening the Treasury’s tax base.
The £900 million haul now accounts for nearly one-tenth of the Chancellor’s overall fiscal headroom and exceeds the revenue generated by the surcharge on bank profits.
The success of the tax comes despite growing international opposition. Former US President Donald Trump has threatened to impose “substantial additional tariffs” on nations maintaining digital levies, which he argues unfairly target American technology giants. His comments followed a meeting with Meta chief executive Mark Zuckerberg and have already influenced other countries, including Canada and India, to shelve similar tax plans.
The UK government had initially committed to repealing the DST once a broader international framework was in place, in line with OECD-led negotiations. However, the withdrawal of the United States from those talks has stalled progress.
A Treasury spokesperson defended the policy, calling it a “fair and proportionate approach” and emphasised that the tax would only be repealed once a lasting global solution is agreed.
