Amazon could avoid UK tax for two more years thanks to Rishi Sunak’s tax break

Amazon could be off the hook for tax in the UK for at least two more years after benefiting from reliefs brought in by Rishi Sunak during the pandemic, a report suggests.

The research from the Fair Tax Foundation indicates that the US tech company claimed more than £800m in capital allowances - business expenses that can be offset against profits - in 2021, £500m more than in 2020.

The value of these allowances was boosted largely thanks to the "super-deduction" scheme for businesses that invest in infrastructure, which was introduced by the current prime ministerial candidate Sunak when he was chancellor last year.

Under the scheme, from 1 April 2021 until 31 March 2023, companies are able to claim allowances equivalent to 30% more than the value of investment in new plant and machinery and up to half the value of further investments in technology that forms parts of buildings, for example air conditioning.

As a result Amazon enjoyed a £75m discount on its tax bill for the year to December 2021, according to the foundation, resulting in Amazon having no tax to pay in 2021. It has already set aside almost £66m against its tax bill for next year based on an estimated £250m of trading losses from 2021.

If the company spends a similar amount on equipment for its warehouses this year, that number will rise again, so that Amazon would have to make profits of more than £600m in the UK before it paid corporation tax this year or next.

Amazon said it had invested more on its warehouses and logistics systems last year as it had expanded its operation. The company invested more than £2.3bn in infrastructure last year as it opened five new warehouses in Swindon, Dartford, Gateshead, Hinckley and Doncaster, three of which were kitted out with its latest robotics technology. It also continued to build and operate datacentres in the UK.