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No. The UK-US Economic Prosperity Deal announced in May 2025 did not remove the UK Digital Services Tax (DST). The US said the UK had not agreed to fully address the tax, while the deal left digital-trade provisions for further negotiation. UK ministers told Parliament in February 2026 that discussions were continuing, including on digital and services trade. Official material reviewed through August 2026 did not report a DST change, but that silence is not confirmation of the tax’s legal status on 8 October 2026.
What is the UK Digital Services Tax?
The DST is a 2% tax on revenue from certain digital services: search engines, social media platforms and online marketplaces. According to the Office of the United States Trade Representative (USTR), it applies only when a company’s worldwide digital-services revenue exceeds £500 million and its UK digital-services revenue exceeds £25 million. Those figures are eligibility thresholds, not amounts of revenue that are automatically taxed. The USTR says companies became liable on 1 April 2020. The rate and thresholds are also repeated in its 2026 trade-policy report. USTR investigation report; USTR 2026 report.
What did the 2025 trade deal say about the tax?
On 8 May 2025, the UK and US announced general terms for the Economic Prosperity Deal (EPD), not a final resolution of every negotiating issue. The USTR said the UK had not agreed to “fully address” its DST and called for it to be removed. Those descriptions—“discriminatory” and “unjustified”—were the US government’s position, not a neutral legal finding. The USTR’s fact sheet also said provisions on digital trade still needed to be finalized. USTR fact sheet, 8 May 2025.
The UK government described the announced terms as commitments and areas in which the countries intended to negotiate further. Its page recorded implementation work and continuing negotiations in June 2025. In other words, the announcement did not say that the DST had been abolished or that the digital-trade discussion was complete. UK-US trade negotiations collection.
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What happened after the announcement?
In a parliamentary answer dated 24 February 2026, the UK government said discussions on the EPD continued and covered tariff and non-tariff barriers, including digital and services trade. The UK’s trade-negotiations collection was updated on 24 August 2026, with material on US tariff changes and other trade context; it did not report a change to the DST. That absence of an announcement on the page is not proof that the tax’s law or administration remained unchanged. UK government trade-negotiations collection.
Tariffs and the DST are different issues. A report of tariff changes does not establish whether a domestic tax on qualifying digital-services revenue has been repealed or amended. The bounded conclusion from these official announcements is that the May 2025 deal left the DST unresolved and that later UK statements reported continuing digital-trade talks; the sources cited here do not establish a definitive legal status for the tax as of 8 October 2026.
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How the DST relates to the OECD tax transition
The DST is a UK domestic tax; an international transition arrangement is a separate matter. The USTR’s 2026 report says the 2021 arrangement for existing digital-services taxes was extended through 30 June 2024 and “has not been in effect since.” It also says the US notified the OECD in January 2025 that commitments made by the previous US administration concerning the global tax deal had no force or effect in the United States without congressional adoption. This is the USTR’s account of US policy, not an announcement changing UK tax law. USTR 2026 report.
Earlier, in a statement to Parliament about a prior round of US-UK trade negotiations, the UK government said the DST and the OECD process sat outside a free-trade agreement and would not feature in those negotiations. It also said the UK preferred a global solution and would remove the DST once one was in place. That was historical policy context, not a current EPD commitment. UK parliamentary statement, 11 February 2020.
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What to take from the headlines
- The EPD announcement did not scrap the DST; the USTR explicitly said the UK had not agreed to fully address it.
- The UK and US left digital-trade provisions for further work, and the UK reported continued discussions covering digital and services trade in February 2026.
- The DST’s 2% rate and revenue thresholds describe the tax as reported by the USTR; they do not, by themselves, verify its legal status on 8 October 2026.
- The expiration of the international transition arrangement in June 2024 is not the same as repeal of the UK tax.
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