Apple and Google are generating more revenue from a "app tax" on digital services in the UK than they pay in corporation tax, according to a new study. Analysis of the companies' latest accounts indicates that while Apple paid £322 million in UK corporation tax in 2025 and Google paid £146 million in 2024, a levy of up to 30 percent on in-app purchases raises approximately £700 million annually for the tech giants.
This "stealth" charge, which falls on app developers but is often passed on to consumers, is estimated to cost households with four smartphone users around £55 annually. Projections suggest this figure could rise to £1.2 billion in five years, equating to £91 per household. Over the next five years, the total cost to Britons from this up to 30 percent tax on in-app purchases is expected to reach £4.1 billion.
The study highlights that for every pound Apple and Google contribute in corporation tax, they charge Britons approximately £1.50 through in-app purchases on their platforms. Former Tory tech minister Damian Collins stated that these figures demonstrate a need for a "new level playing field to stop tech firms from overcharging and underpaying."
Dominic Fean of the Coalition For App Fairness, a campaign group, asserted that the current app store model is detrimental to the UK economy, with Apple and Google extracting more from Britons through their "app tax" than they pay to the Treasury in corporation tax.
These findings emerge as the UK's competition regulator, the Competition and Markets Authority (CMA), has proposed measures to address the issue. The CMA's plans aim to compel Apple and Google to allow users access to cheaper deals when subscribing to apps, potentially saving consumers billions. The regulator launched a consultation on these plans in June, citing the urgent need for action.
Apple, which charges a base rate of 30 percent for app purchases on its platform, has faced criticism and legal challenges. While it introduced a lower 15 percent rate for smaller companies in 2020, critics argue it remains excessive. Furthermore, Apple's guidelines restrict apps from offering alternative payment methods or linking to external, potentially cheaper deals, forcing users to transact exclusively through Apple.
Google's Play Store for Android devices charges fees of up to approximately 25 percent for in-app purchases but has eased restrictions on offering links to more affordable options. The Digital Markets, Competition and Consumers Act 2024 empowers the CMA to set fee caps and fine these tech companies, though its current consultation focuses on promoting competition and reducing subscription charges by requiring access to cheaper deals.
The consultation closed at the end of July, with an announcement expected later this year. The study's scope was limited to corporation tax and did not include other taxes such as VAT or National Insurance contributions.
A Google spokesperson stated, "We pay all our taxes that are due." Apple commented that only about 15 percent of developers incur the "app tax," and most of these benefit from the reduced rate for smaller firms, suggesting the Coalition for App Fairness is funded by a small group of developers seeking to avoid paying for the value provided by Apple's platforms.
