What changed
Marketplaces account for VAT on B2C sales by UK businesses when goods are in the UK at sale
When
Announced 28 October 2026, starts October 2027
Who it affects
VAT-registered UK sellers at any size, and unregistered UK sellers above £90,000 a year on one platform
What to do
Model your VAT cash flow now and plan a move to monthly returns

Key takeaways

  • VAT-registered UK sellers are in scope at any sales level from October 2027; the £90,000 test only applies to unregistered sellers.
  • Profit should not change for compliant sellers, but cash does: many may move from paying VAT to reclaiming it.
  • Own-site sales, B2B sales and second-hand goods stay outside the rule.

UK marketplace VAT: key dates

  1. Marketplaces take on VAT for overseas sellers

  2. Government opens consultation

  3. Consultation closes, 67 responses

  4. Budget confirms extension to UK businesses

  5. HMRC guidance and legislation due

  6. Marketplaces account for VAT on UK sellers' sales

What changed, and who is in

Since January 2021, marketplaces have accounted for VAT on sales by overseas sellers of goods already in the UK, and on imported consignments of £135 or less. The new rule extends that duty to UK businesses. The government's response to its consultation, which drew 67 replies, sets out the final shape.

  • In: UK VAT-registered businesses, on sales of goods in the UK at the point of sale, at any level of sales through the platform
  • In: UK businesses that are not VAT registered, once annual sales on one platform exceed £90,000
  • Out: business to business sales, personal sales and second-hand goods, so the VAT margin scheme survives for refurbished sellers
  • Not touched: sales on your own website or in your own shop, which stay on your normal VAT return

Who is in scope from October 2027

SellerIn scope?
VAT registered, any salesUK business
Unregistered, over £90,000 on one platformUK business
Unregistered, under £90,000 per platformUK business
Own website salesAny
B2B or second-handAny

The line most headlines miss

The £90,000 figure reads like a small business shield. For a registered seller it is nothing of the kind. Paragraph 3.17 of the government response says marketplaces must account for VAT on registered businesses' sales whatever the value of those sales on the platform. A registered brand doing £15,000 a year on eBay is in scope.

The threshold is also per platform. ICAEW, the accountants' body, warns that a business could pass the £90,000 registration limit in total while staying under it on each marketplace, so the test may not catch the people it targets. That seller still has to register under the normal rules, and once registered, every platform is in scope.

The revenue is smaller than the noise too. Pre-Budget reports suggested up to £1 billion. Travers Smith puts the forecast at £165 million to £320 million a year. A common view among respondents was at least 12 months after detailed guidance. The government said it feels obliged to act quickly and has set October 2027, with guidance still unpublished.

So what: profit stays, cash moves

VAT is not meant to be a cost for a compliant seller, and input VAT stays reclaimable as it does now. The change is timing. Under the consultation model, your sale to the marketplace is treated as zero-rated and the marketplace charges the customer VAT. You stop holding output VAT between quarters, and you may move into a repayment position. The government's response refers to this model but legislation is not out yet, so treat the mechanics as likely, not final.

Example with illustrative numbers: a brand sells £120,000 net a quarter on Amazon UK at the 20% rate, and pays £70,000 net on stock and fees with £14,000 of input VAT. Today it collects £24,000 of VAT, pays out £14,000 and sends HMRC £10,000 after the quarter ends. Until then it holds £10,000. Under the new model it never receives the £24,000, has still paid the £14,000, and waits for a repayment. That is a £24,000 swing in working capital at the peak of each quarter, with no change to profit. On monthly returns the wait falls to about one month, or roughly £4,667 of input VAT at a time.

Check the effect on your margin with our Amazon profit calculator, and remember Amazon FBA fees and stock purchases all carry on as before.

What sellers should do before October 2027

The cash planning does not need to wait for HMRC guidance.

  • Finance lead: split the last 12 months of sales by marketplace, own site and B2B in your VAT software. Metric: share of sales that move to marketplace VAT.
  • Finance lead: run the example above with your own numbers for your peak quarter. Metric: maximum working capital gap in pounds.
  • Finance lead: ask your bank or lender about the gap by Q2 2027, while you can show a plan. Metric: facility headroom above the gap.
  • Accountant: if you use the Flat Rate Scheme, flag it now. The government is still deciding how it will work with this rule. Metric: a written plan once guidance lands.
  • Accountant: plan the move to monthly VAT returns, which the government names as the cash flow fix. Metric: days between paying input VAT and repayment.
  • Marketplace manager: check that your business VAT number and B2B settings are correct in Seller Central and on eBay, since B2B sales are excluded. Metric: B2B orders flagged correctly.

Before October 2027

  • Split sales by channel
  • Size the working capital gap
  • Talk to your lender
  • Check Flat Rate Scheme position
  • Plan monthly VAT returns
  • Check B2B settings

When this does not apply

US and other non-UK sellers already fall under the 2021 rules on UK stock, so this adds little for them, though the wider EU and UK marketplace picture keeps moving, including the EU €2 handling fee. Unregistered UK sellers under £90,000 per platform stay out, though HMRC says normal compliance work continues below that line. Sellers of goods that are zero-rated keep that rate. Second-hand specialists are excluded. This is a summary, not tax advice, and HMRC guidance may change the detail.

Where PPC Spider fits

A cash squeeze usually shows up first as cut ad budgets in peak quarters. Our Amazon account management team plans ad spend and stock against margin after fees, and a free Amazon audit will show where your UK cash is tied up. More UK and global rule changes are on our ecommerce marketplace news channel.

Sources

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