The government is preparing proposals to extend the BBC licence fee to online streaming platforms, including Netflix, YouTube, Amazon Prime Video and Disney+, in a move that has unofficially been dubbed the “YouTube tax”.

A white paper outlining plans for the renewal of the BBC Charter is expected to be published before Christmas. It is set to include proposals to reform the broadcaster’s existing funding system, with the aim of generating additional revenue and adapting to changing viewing habits.

A senior Whitehall source told The Independent that extending the licence fee to online services would prevent people from accessing television content through phones, tablets and computers without paying.

Under the current rules, households must pay the annual licence fee if they watch television programmes as they are broadcast on any channel or use BBC iPlayer, even if they do not watch live BBC television. However, subscriptions to streaming services such as Netflix and Disney+ do not require a TV licence when viewers watch on-demand content alone.

The proposed changes would expand the existing system to cover other online providers and a wider range of streaming content.

The Whitehall source defended the proposal, saying it was necessary “because people are able to use them to avoid paying currently”.

They added: “It’s not fair that people are essentially able to watch television content but avoid the licence fee.”

The source also said discussions over the BBC Charter renewal had been delayed under the previous administration.

“But now we have had a change of prime minister, we are able to press ahead with the plan to expand it to streaming platforms”, they added.

Additional funding could support local journalism

Under the proposals, additional revenue generated by an expanded licence fee would be directed towards supporting local journalism and tackling misinformation.

The government is understood to be considering how to strengthen local news provision while addressing concerns about the spread of misleading information online.

The plans come at a challenging time for the BBC, which faces questions about its long-term financial sustainability as viewing habits increasingly shift away from traditional television towards digital platforms.

The broadcaster has been under pressure to maintain its services while facing concerns that more households could abandon the licence fee altogether.

The annual BBC licence fee currently stands at £180. It is free for people aged 75 and over who receive Pension Credit, while eligible people who are registered blind can receive a 50 per cent reduction.

Why the proposal is being called the ‘YouTube tax’

The suggested changes have acquired the nickname “YouTube tax” because of the video-sharing platform’s substantial audience in Britain.

YouTube has approximately 55 million users in the UK, giving it a significant presence in the country's online media market.

Supporters of reform argue that the existing licence fee system needs to reflect how people now watch television and online video content, rather than focusing primarily on conventional television sets.

However, extending the charge to streaming platforms could raise questions about how the fee would be applied, who would be required to pay and whether people who do not watch BBC programmes should contribute towards its funding.

The proposals also emerge as the BBC prepares to launch its news channel on YouTube, highlighting the broadcaster's growing reliance on digital platforms to reach audiences.

Although the government’s plans are intended to address changes in viewing habits and strengthen the BBC’s finances, the final details of any revised funding arrangement will be crucial in determining how the changes affect households and streaming services.

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