US 'will refuse to do UK trade deal unless digital tax is scrapped'
The US government will not enter into a free trade deal with the UK unless a tax on digital services is scrapped.
The new levy is due to come into force in April, and is designed to make sure that big tech companies pay more of the tax that they owe.
But the Daily Telegraph reports that Donald Trump's administration has told the UK government that it will not negotiate a deal while the tax is in force.
A source reportedly told the newspaper: "The message was, 'if you go ahead with this tax, we will not begin free trade negotiations with you.'"
The digital services tax will see a 2 per cent levy placed on tech giants, and is expected to raise around £400 million in new tax receipts by 2022.
But the US government reportedly see it as as raid on American companies.
The Trump administration has also criticised a similar levy introduced by France, under which the biggest tech companies are subject to a 3 per cent tax.
Meanwhile the EU is planning its own version of the tax, which it says will raise £4.3 billion a year for EU member states.
At least half of the businesses likely to be affected are based in the US.