Apple and Googling get more out of an ‘app tax’ on Britons than they do pay corporate taxanalysis shows.
A study found that Apple paid £322 million in UK corporation tax last year, while Google paid £146 million in 2024 – the latest accounts available for both tech giants.
But a “stealth” charge of up to 30 percent when users subscribe to their favorite digital services on iPhones and Google-powered smartphones will net Silicon Valley companies around £700 million a year.
This equates to around £55 a year for a family household with four smartphone users, the research found.
But this is expected to rise to as much as £1.2 billion – or the equivalent of £91 for the same household – within five years.
Over the next five years, the ‘app tax’ will increase to 30 percent on in-app purchases is expected to cost the UK £4.1 billion.
While the ‘tax’ is paid by app developers, including dating platforms like Tinder and HingeCampaigners say it is being passed on to consumers. This forces them to pay a third more for their favorite services.
According to the latest figures, Apple paid £322 million in UK corporation tax last year
Research shows Google will have paid £146 million in corporation tax by 2024, the latest accounts available for the tech giant in Britain
Former Tory Technology Secretary Damian Collins said the figures show that ‘we need a new level playing field to stop tech companies paying too much or too little’
The analysis found that Apple and Google have money for every £1 contributed to the state treasury in corporate taxesthey charged Brits around £1.50 for in-app purchases on Apple and Google devices.
Former Tory technology secretary Damian Collins said: ‘This shows how Google and Apple are extracting value from British taxpayers.
‘They pay far less tax than they should, compared to other UK companies, and continue to overcharge businesses and consumers for the use of their products.
“We need a new level playing field to prevent tech companies from paying too much or too little.”
Dominic Fean, of campaign group Coalition For App Fairness, said: ‘Apple and Google have reaped more from the British through their ‘app tax’ than they paid to the Treasury in corporation tax.
“It proves that the current app store model is not working in the interests of the UK economy.”
It comes after the competition authority suggested that Apple and Google’s charges were not ‘fair and reasonable’ launched proposals for a crackdown.
Under plans from the Competition and Markets Authority (CMA), the Silicon Valley giants would be forced to give iPhone and Google smartphone users access to cheaper deals when subscribe to their favorite apps – potentially saving the British billions of pounds.
The regulator, which launched its consultation on the plans in June, said action was “desperately” needed.
Apple, which offers its 1.5 billion iPhone users access to about 1.8 million apps, has done so faced criticism and legal battles for years over the basic rate of 30 percent. It introduced a lower rate of 15 percent for smaller businesses whose 2020 revenues are less than £740,000. But critics say this remains too high.
And few users are aware that they can find their favorite digital goods and services cheaper elsewhere, because Apple guidelines prevent apps from offering them this option.
Companies are not allowed to offer iPhone users any other way to pay – such as external links or QR codes – and must go through Apple.
Google charges fees of up to around 25 percent for in-app purchases in the Play Store for Android devices, but has relaxed restrictions to prevent links to cheaper deals from being offered.
The Digital Markets, Competition and Consumers Act 2024 gave the CMA the power to set caps on the fees charged, as well as the ability to impose fines on Apple or Google.
But the consultation did not propose this and instead focuses on forcing Apple and Google to give iPhone and Google smartphone users access to cheaper offers in a bid to create more competition and reduce subscription costs.
The consultation closed at the end of July and an announcement is expected later this year.
The CAF study only looked at corporate tax, currently up to 25 percent on profits, and not at other taxes such as VAT, employer national insurance contributions, business rates or customs duties.
A Google spokesperson said, “We pay all our taxes that are due.”
Apple said only about 15 percent of developers pay the ‘app tax’ and most of these pay the lower rate of 15 percent for smaller companies.
A spokesperson added: ‘The Coalition for App Fairness is funded by a small group of developers who simply don’t want to pay for the tremendous value they receive from Apple’s platforms and technologies.
“They represent only a very small part of the broader developer community.”
