Apple and Google are generating more revenue from a commission on digital service subscriptions in the UK than they pay in corporation tax, according to a new study. Analysis indicates that a "stealth" levy of up to 30 percent on in-app purchases for services like dating apps and streaming platforms is raising approximately £700 million annually for the Silicon Valley companies.
This figure is projected to rise to as much as £1.2 billion in five years, a substantial increase from the £322 million Apple paid in UK corporation tax for the 2025 financial year and the £146 million Google paid in 2024, according to their latest available accounts. The study suggests that for every £1 Apple and Google have contributed to the UK public purse in corporation tax, they have charged Britons around £1.50 for in-app purchases.
Campaigners argue that this "app tax," though paid by app developers, is ultimately passed on to consumers, leading to price increases of up to a third for digital services. The Coalition For App Fairness, a campaign group, stated that the current app store model is detrimental to the UK economy.
Former Conservative tech minister Damian Collins commented on the findings, stating, "This shows how Google and Apple extract value from UK taxpayers. They pay far less tax than they should compared to other UK-based businesses and still overcharge business and consumers for using their products. We need a new level playing field to stop tech firms from overcharging and underpaying."
Over the next five years, the total cost to Britons from this up to 30 percent "app tax" on in-app purchases is projected to reach £4.1 billion. The research found that the charge is equivalent to about £55 annually for a family household with four smartphone users, a figure expected to rise to £91 within five years.
These findings emerge as the UK's Competition and Markets Authority (CMA) has proposed measures to address concerns that Apple and Google's charges may not be "fair and reasonable." The regulator's proposals aim to force the tech giants to provide users with access to cheaper deals when subscribing to apps, potentially saving consumers billions. The CMA launched a consultation on these plans in June, with an announcement expected later this year.
Apple, which offers its 1.8 million apps to 1.5 billion iPhone users, has faced prolonged criticism and legal challenges regarding its standard 30 percent commission rate. While a lower rate of 15 percent was introduced for smaller companies earning below £740,000 in 2020, critics maintain it remains excessively high. Furthermore, Apple's guidelines restrict apps from directing users to external payment options, such as links or QR codes, thus compelling users to pay through Apple's system.
Google, which charges up to approximately 25 percent for in-app purchases on its Play Store for Android devices, has shown more flexibility by easing restrictions on offering links to cheaper deals. The Digital Markets, Competition and Consumers Act 2024 has empowered the CMA with the authority to set fee caps and impose fines on Apple and Google. However, the current consultation focuses on compelling the companies to offer consumers access to more competitive pricing rather than mandating fee reductions.
The study by the Coalition For App Fairness focused solely on corporation tax and did not account for other taxes such as VAT, employer National Insurance contributions, business rates, or customs duties. In response, a Google spokesperson stated, "We pay all our taxes that are due." An Apple spokesperson commented that only about 15 percent of developers pay the "app tax," and most of these benefit from the lower 15 percent rate for smaller firms. The spokesperson added that the Coalition for App Fairness is funded by a small group of developers who object to paying for the value they receive from Apple's platforms.