You list a product, the order comes in and the money lands in your account. But who is responsible for the VAT? Many sellers assume Amazon, eBay or Etsy deals with it. For most UK sellers, that assumption is wrong.
This guide explains how to handle marketplace VAT for UK sellers in plain English: when to register, what the platforms do (and don’t) do, and how to stay compliant with HMRC.
Who Is Responsible for VAT on Marketplace Sales?
If you are a UK-based business, you are responsible for registering for VAT, charging it correctly and filing returns. The marketplace may show VAT on invoices or offer calculation tools, but it does not file your return.
Marketplaces do carry legal responsibility in some cases. Since 2021, they must account for VAT on certain sales by overseas sellers to UK customers, including goods in consignments worth £135 or less. Overseas sellers with no UK establishment have no threshold and must register from their first taxable UK sale.
Marketplaces must also check that sellers hold valid VAT numbers, and HMRC can hold them jointly liable for a seller’s unpaid VAT.
The VAT Registration Threshold in 2026
The UK VAT registration threshold is £90,000 of taxable turnover for 2026/27. The deregistration threshold is £88,000.
You must register if:
- Your taxable turnover exceeds £90,000 in any rolling 12-month period, or
- You expect to exceed it within the next 30 days alone.
Two points catch sellers out:
- It’s turnover, not profit. It means total sales, before costs.
- All channels count. Add together Amazon, eBay, Etsy, Shopify and any other sales. Splitting sales across platforms does not keep you under the limit.
Example: Tom sells candles. He makes £45,000 on Amazon, £30,000 on Etsy and £22,000 through his Shopify store. Each channel looks small, but his total is £97,000, so he must register.
How to Handle Marketplace VAT for UK Sellers: Step by Step
1. Track your rolling turnover monthly
Export sales from every channel and add up the last 12 months. Do this at the end of each month, not once a year.
2. Register through HMRC
Register online via your Government Gateway account. A VAT number often takes around 10 to 30 working days, so don’t leave it late. If you register late, HMRC can charge you VAT back to the date you should have registered, plus penalties.
3. Add your VAT number to each marketplace
Update your seller accounts so invoices and VAT reporting tools work properly.
4. Charge the right rate
Most goods are 20%, but some are reduced or zero-rated. Check each product category rather than assuming.
5. Keep digital records and file through MTD
VAT-registered businesses must keep digital records and file returns using Making Tax Digital (MTD) compatible software. Many sellers use Xero, QuickBooks or tools that import marketplace reports.
6. Reclaim input VAT
You can generally reclaim VAT on stock, packaging, marketplace fees and advertising, provided you hold valid invoices.
A Rule Change to Watch: Marketplaces and UK Sellers
HMRC and HM Treasury ran a consultation, which closed on 18 August 2026, on extending marketplace VAT liability to sales by UK sellers. Under HMRC’s lead option, marketplaces would become responsible for VAT on UK sellers’ sales once a seller’s sales on that platform exceed £90,000, alongside the normal registration rules. Alternatives include a lower threshold or VAT rate relief for small sellers.
Nothing has been confirmed, but expect more scrutiny of sellers who split sales across platforms.
Note: Rules and thresholds change. Verify all figures and dates on gov.uk or with HMRC before publishing or relying on them.
Marketplace VAT Checklist for UK Sellers
- Review rolling 12-month turnover across all channels each month
- Set an alert at £80,000 to give yourself time to register
- Register for VAT within 30 days of breaching the threshold
- Store VAT invoices for all business purchases
- Use MTD-compatible software for records and returns
- Reconcile marketplace payouts, fees and refunds each month
- Check whether you need to register in other countries if you hold stock or sell overseas
- Ask an accountant to review your setup annually
Frequently Asked Questions
Does Amazon charge VAT for UK sellers?
Amazon can calculate VAT on your sales, but as a UK seller you remain responsible for registering, filing returns and paying HMRC.
Do I need to register for VAT if I sell only on eBay or Etsy?
Yes, if your taxable turnover goes over £90,000 in 12 months. The same threshold applies whichever platform you use.
Can I register for VAT voluntarily?
Yes. Registering below the threshold lets you reclaim VAT on business costs, which helps if you buy lots of stock. However, you then have to charge VAT to customers and file returns.
What if I sell to customers in the EU?
Different rules apply, including possible EU VAT registration and import schemes. Get specialist advice before you start.
Is Making Tax Digital compulsory?
For VAT-registered businesses, yes. MTD for Income Tax is also being phased in, starting in April 2026 for sole traders with qualifying income above £50,000.
Conclusion: Stay in Control of Marketplace VAT
Knowing how to handle marketplace VAT for UK sellers comes down to three habits: monitor your total turnover, register on time and keep clean digital records. Get those right and VAT becomes routine instead of a risk.
Not sure whether you need to register, or already behind on returns? Book a free VAT health check with our ecommerce tax team today and get clear next steps.
