Online marketplaces collect VAT for UK sellers from October 2027: who is in scope

Published 29 October 2026 · 12 min read · Angler Fulfilment

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From October 2027, online marketplaces collect VAT for UK sellers on sales of goods to consumers. If you sell on a marketplace such as Amazon, eBay, Etsy, TikTok Shop, OnBuy or Temu and you are VAT registered, the marketplace will account for the VAT on those sales instead of you. If you are not registered, it does the same once your sales on that one platform pass £90,000 a year.

The change was announced in the Budget on 28 October 2026, with an HMRC policy paper, a Treasury factsheet and a summary of consultation responses. We read all four on 29 October 2026. Everything below comes from them, and where they leave something open, we say so.

One thing first. We are a fulfilment company, not tax advisers. This page explains what the government has published so you can ask your accountant the right questions. It is not tax advice for your business.

What was announced on 28 October 2026

The Budget document says the government will make marketplaces “responsible for collecting VAT on sales by UK businesses, where those businesses are making more than £90,000 of sales through the marketplace”, and that it “will be implemented from October 2027 and will not impact personal sales through marketplaces” (section 3.8). Its costings table, Table 6.1 (row 46), dates the start “1 October 2027”.

HMRC’s policy paper gives the legal shape. The rules will cover sales where a marketplace facilitates the sale of goods by a UK established business, the goods are in the UK at the time of sale, and the sale is to a consumer. They apply where the seller is VAT registered, or where its sales on that marketplace are above the threshold. The paper says the rules “will not apply to non-business (for example, personal) sales, second-hand goods, or business-to-business transactions.”

The documents do not name platforms. The rules use the legal definition of an online marketplace that has applied since 2021, and the consultation notes that “all online marketplaces are subject to the 2021 reforms.” HMRC’s guidance describes a website or app that sets the terms of supply and is involved in the payment and in ordering or delivery; a site that only lists goods or redirects shoppers is not one. Amazon, eBay, Etsy, TikTok Shop, OnBuy and Temu take the order and the payment on their own platforms, which is that model. Expect each to confirm its position in seller notices.

The government expects it to raise £165 million in 2027 to 2028, rising to £320 million the year after, and HMRC estimates it will have a significant impact on about 100,000 businesses. The money is earmarked for business rates cuts on the high street.

How the 2021 rules already work for overseas sellers

Since January 2021 marketplaces have been liable for the VAT on sales by overseas sellers, for goods of any value already in the UK at the point of sale and for imported consignments of £135 or less. HMRC’s guidance on those rules explains the mechanism: the overseas seller makes a zero-rated “deemed supply” to the marketplace, which makes the taxable sale and pays the VAT. The consultation says those rules, together with the end of low value consignment relief, are estimated to have raised more than £8 billion.

The 2027 change points the same mechanism at UK sellers. The consultation described the model this way: when a business sells through a marketplace, “a deemed zero-rated supply will take place between the businesses and OMP. The OMP will charge VAT at the relevant rate and account for the VAT on their own VAT return.” The detail will be set in secondary legislation, which has not been published yet.

Who is in scope: four sellers, worked through

The test has two parts. Are you VAT registered? If not, are your sales on any one platform over £90,000 a year? The factsheet says the threshold “applies separately to your annual sales on each platform where you do business.” All four below are UK sellers with UK stock, selling to consumers.

1. One platform, over £90,000, not registered

A seller turns over £110,000 a year, £100,000 of it on Amazon and the rest on eBay. Amazon sales are over £90,000, so Amazon must collect the VAT on them. But this seller is also over the £90,000 VAT registration threshold on total turnover, so they should be registered already. This is the case the rule targets: HMRC estimates that tens of thousands of UK businesses trading through marketplaces are not meeting their VAT obligations.

2. Several platforms, each under £90,000

A seller does £60,000 on Amazon, £40,000 on eBay and £20,000 on TikTok Shop. No single platform passes £90,000, so on the platform test alone, none of them has to collect. This is the case that is easiest to misread. The factsheet is clear that the threshold “does not affect businesses’ existing VAT registration obligations”, and the consultation says it would not remove the duty to register “when its total turnover meets the current VAT registration threshold.” At £120,000 in total, this seller has to be registered. Once registered, every marketplace collects on every qualifying sale.

3. A small seller who is VAT registered

A seller does £40,000 a year on Etsy and registered for VAT voluntarily. The threshold does not help here. The summary of responses says that for VAT registered UK businesses, marketplaces will account for VAT “regardless of the value of their sales through the platform.” Etsy collects from October 2027.

4. Under the threshold and not registered

A seller does £30,000 on eBay and £15,000 on their own Shopify site, and is not registered. Nothing changes. The factsheet says VAT will not be collected on their sales by any marketplace. The government rejected a lower threshold to keep sellers like this outside the rules.

What happens to your cash flow

For a VAT registered seller this is the part that bites. Today the VAT on a marketplace sale comes to you with the sale, and you pay it to HMRC after the quarter ends. From October 2027 the marketplace pays it over instead. The consultation says so: “no longer doing so may have a cashflow impact as the VAT they would normally hold before accounting it to HMRC will now be collected by the marketplaces.”

A worked quarter, with round figures of our own, every sale standard rated at 20 per cent and made through a marketplace:

The bottom line does not move; the timing does. Today you hold £6,000 through the quarter and hand over £2,400 at the end. Afterwards you never hold the £6,000, and you wait for HMRC to repay £3,600. That is a £6,000 swing in working capital on £36,000 of sales, and it repeats every quarter.

The consultation responses flagged exactly this: some sellers expect to move into a net repayment position. The government’s answer is that “businesses can apply to move onto monthly VAT returns”, which shortens the wait for a repayment. If you also sell on your own website, the VAT on those sales stays with you and offsets the reclaim, so a mixed seller feels a smaller swing.

Two things are not set out yet. How each marketplace will show the VAT in your payouts and reports has not been published. And the deemed zero-rated supply is the model the consultation described, not final law. Check both against HMRC’s guidance when it lands.

Can you still reclaim input VAT?

Yes, on what has been published. The consultation says: “Businesses will still be able to recover input tax, including on online sales, as they do now, in line with the current rules.” The VAT you pay on stock, packaging, marketplace fees and fulfilment stays reclaimable if you are registered. Nothing in the four documents changes how VAT is charged on marketplace fees. If you are not registered, those costs carry VAT you cannot reclaim, as now.

The rates on the goods do not change either. A zero-rated product, the consultation says, “would continue to be so following the application of the new rules.”

What does not change

• Your own website. The consultation says there will be “no other change to a business’s VAT obligations such as sales through their own websites and physical storefronts.” Shopify, WooCommerce or any site where you are the seller works as it does today.
• Your duty to register. The £90,000 registration threshold still applies to your whole turnover, across every channel.
• Sales to other businesses. Business to business sales are excluded.
• Second-hand goods. Excluded, so sellers using the second-hand margin scheme keep charging VAT the usual way.
• Overseas sellers. The 2021 rules for them carry on unchanged, and the platform threshold does not apply to them.

Does it matter where your stock is?

The test in the policy paper is that the goods are in the UK at the time of sale. It does not say who has to hold them. On the wording published, stock in your own unit, with a 3PL like us, or in an Amazon fulfilment centre looks the same, so FBA and self-fulfilled Amazon orders fall under the same rule. The marketplace, not the warehouse, triggers it.

The open questions, waiting on HMRC guidance

HMRC will publish detailed guidance before implementation. Until then, these are genuinely open.

• The exact start date. The Budget table says 1 October 2027. The policy paper says secondary legislation will set “the planned date of implementation”.
• How the £90,000 is measured. How sales are counted, how returns are treated, and when liability starts once the threshold is crossed are all still being worked out.
• The Flat Rate Scheme. Very few Flat Rate Scheme users responded, so the government will “take more time to consider how the Flat Rate Scheme will function” alongside the change. If you are on it, wait for the guidance and talk to your accountant.
• Proving goods are second-hand. The government accepts there is a risk of new goods being passed off as used, and will work with marketplaces on guidance.
• Payouts, invoices and records. How marketplaces report the VAT they collect for you has not been set out.

The dates, in order

Other Budget changes for online sellers

Three more measures in the Budget document touch small online sellers. The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027, so an individual can receive up to £3,000 of trading and miscellaneous income tax free each year. That is income tax, not VAT. The £135 customs duty relief on low value imports goes from October 2028. And VAT e-invoicing becomes compulsory from 1 April 2029.

What to do now

• Pull your last 12 months of sales by platform, and your total turnover across every channel, including your own site.
• If your total is over £90,000 and you are not registered, speak to an accountant now. That duty exists today, regardless of October 2027.
• If you are registered, model the cash. Work out the VAT on a quarter of marketplace sales that you will stop holding, and whether monthly returns would help.
• Check the VAT rate on every listing. HMRC’s policy paper lists “verifying VAT treatment of listings” among the ongoing costs for sellers, and a zero-rated product listed as standard rated could be charged the wrong VAT.
• If you sell second-hand goods, keep records that show it. The exclusion depends on it.
• On the Flat Rate Scheme? Wait for HMRC’s guidance before changing anything, and ask your accountant.
• Watch for seller notices from Amazon, eBay, TikTok Shop and the rest. They have to change their systems too.

Where a 3PL fits

The VAT change does not alter how an order is picked, packed or posted. It may change your channel mix, with some sellers looking harder at their own website, where the VAT stays with them.

Either way, the stock does not need to move. We hold one pool of stock and fulfil orders from your own site and every marketplace you sell on, so shifting sales between channels is a listings decision, not a warehouse one. How that works, and how to stop overselling, is in our guide to multi-channel stock at a 3PL. If you also use FBA, what Amazon’s storage really costs is worth reading alongside this. Our fulfilment service and full rate card are published.

Marketplace VAT from 2027, answered

When do online marketplaces start collecting VAT for UK sellers?

From October 2027. The Budget 2026 costings table dates the change 1 October 2027, and HMRC’s policy paper says secondary legislation will confirm the implementation date. HMRC will publish detailed guidance before then.

Is the £90,000 marketplace VAT threshold counted per platform or in total?

Per platform. The government’s factsheet says the £90,000 threshold applies separately to your annual sales on each platform. It does not change your duty to register for VAT once your total turnover passes the £90,000 registration threshold, and once you are registered every marketplace collects the VAT on your qualifying sales.

Will Amazon collect the VAT if I am a small VAT registered seller?

Yes. For VAT registered UK businesses, the government says marketplaces will account for VAT on consumer sales of goods in the UK regardless of how much you sell through the platform. The £90,000 threshold only matters for sellers who are not registered.

Can I still reclaim input VAT when the marketplace collects the VAT?

On what has been published, yes. The consultation says businesses will still be able to recover input tax as they do now. Because the marketplace accounts for the VAT on your sales, some registered sellers may find HMRC owes them money each quarter, and the government says businesses can apply for monthly VAT returns to ease the cash flow.

Does the marketplace VAT change affect sales on my own Shopify website?

No. The rules cover sales made through online marketplaces. The consultation says there is no other change to a business’s VAT obligations, such as sales through its own website or shop, so you keep accounting for VAT on those sales as now.

Which sales are excluded from the marketplace VAT rules?

Second-hand goods, personal sales by individuals clearing out their own belongings, and business to business sales are all excluded. Sellers of second-hand goods keep charging VAT in the usual way, including under the margin scheme.