Key takeaways

  • From October 2027, online marketplaces will account for VAT on sales of goods in the UK by UK businesses to consumers.
  • It applies to sellers who are VAT-registered, or who sell more than £90,000 a year on a single platform.
  • Personal sales, second-hand goods and business-to-business sales are excluded.
  • Around 100,000 businesses are affected, and the revenue is earmarked for business rates relief on the high street.
  • ICAEW warns a per-platform threshold may miss businesses that sell across several marketplaces.

Online marketplaces such as Amazon and eBay will become responsible for collecting VAT on many sales by UK sellers from October 2027. The rules already apply to overseas sellers. Budget 2026 extends them to UK businesses that are VAT-registered or sell more than £90,000 a year on any one platform. For practices with e-commerce clients, this will change cash flow, VAT returns and pricing.

What was announced

HMRC’s tax information and impact note says the online marketplace liability rules will be extended to UK businesses where the goods are in the UK at the point of sale and are sold to a consumer. The marketplace will be responsible for collecting VAT on sales by:

  • UK VAT-registered businesses, and
  • any other UK business with annual sales on that platform above a minimum threshold of £90,000

The rules will not apply to personal sales, such as people selling their own belongings, to second-hand goods, or to business-to-business sales. The government intends to implement them from October 2027. ICAEW and the Budget document’s costing table give the date as 1 October 2027. Secondary legislation in 2027 will set the threshold, how it operates, the treatment of second-hand goods and the implementation date.

Why it is happening

The original marketplace rules, introduced in January 2021, made platforms account for VAT on goods sold by overseas businesses and on imports of £135 or less. HMRC says compliance problems remain: some overseas sellers misrepresent where they are established, and some UK sellers fail to register or under-declare. The Budget document says the money raised will be reinvested in the high street through business rates reductions. The Treasury expects the measure to raise £165 million in 2027-28 and £320 million in 2028-29.

How the £90,000 platform threshold works

The government’s factsheet explains that the £90,000 applies separately to each platform:

  • a UK business that is not VAT-registered and sells less than £90,000 a year on each platform it uses will not have VAT collected by any of them
  • a VAT-registered business will have VAT collected on all its qualifying marketplace sales, whatever the amount
  • the threshold does not change a business’s existing VAT registration obligations

ICAEW supports the aim but is concerned that a per-platform threshold is not a reliable way to identify businesses that should be registered. A seller could be over the £90,000 VAT registration threshold in total while staying under £90,000 on each marketplace.

Who it affects and how

HMRC expects a significant impact on around 100,000 businesses. The VAT on their marketplace sales will be collected by the marketplace rather than by the seller. HMRC estimates one-off costs of £40 million across marketplaces and sellers, and net ongoing costs of £8 million a year. For sellers it lists:

  • reviewing listings to check which sales are in scope
  • updating software and arrangements with marketplaces
  • providing evidence to marketplaces and verifying the VAT treatment of listings
  • arranging alternative cash flow, because VAT on sales will no longer pass through the seller’s account

Some sellers may move into a repayment position, because their output VAT is collected by the platform while they still incur input VAT on stock and costs.

What it means for accountants

Model the cash flow change for VAT-registered sellers. Sellers who currently hold VAT collected on sales until their return is due will lose that working capital from October 2027. Clients with tight cash flow need to plan now.

Expect VAT returns to change shape. If the platform accounts for VAT on sales, the seller’s return will mainly show input VAT on purchases and VAT on non-marketplace sales. Repayment returns may become common for marketplace-heavy businesses.

Check unregistered sellers’ total turnover. Staying under £90,000 per platform does not mean a seller can stay unregistered. Their combined taxable turnover across all channels still decides whether they must register. See our guide to VAT registration.

Watch for the guidance. HMRC will publish detailed guidance before implementation, including accounting changes sellers may need to make. Second-hand dealers need to confirm how their margin scheme sales are treated.

For the other VAT measures in the Budget, see VAT changes in Budget 2026, and for the business rates package this measure helps to fund, see business rates from April 2027.

Frequently asked questions

When will online marketplaces start collecting VAT for UK sellers?

From October 2027. ICAEW and the Budget document’s costing table give the start date as 1 October 2027, with secondary legislation in 2027 confirming the details.

Will VAT be charged when I sell my own things on a marketplace?

No. The rules do not apply to personal sales, such as occasionally selling your own clothes or household items.

Does the £90,000 threshold apply across all marketplaces?

No. It applies separately to annual sales on each platform. A VAT-registered business is in scope for all its qualifying marketplace sales regardless of the amount.

Are second-hand goods included?

No. Marketplaces will not collect VAT on second-hand goods sold by UK businesses, who will continue to account for VAT on those sales in the usual way.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 28 October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.