Key takeaways
- UK marketplaces are currently the deemed supplier only for overseas sellers and for imported consignments of £135 or less.
- Budget 2026 confirmed the extension to UK-established businesses selling goods to consumers, from October 2027.
- Marketplaces will collect VAT on sales by all UK VAT-registered sellers, and by other UK sellers above £90,000 of annual sales per platform.
- Personal sales, second-hand goods and B2B sales are excluded.
- The threshold and exact start date will be set in secondary legislation in 2027.
- The Flat Rate Scheme and Northern Ireland are still open; HMRC will publish guidance before the start.
In short: Today, UK marketplace VAT rules make platforms like Amazon and eBay the "deemed supplier" for overseas sellers and small imports. Budget 2026 confirmed that this will extend to UK-established businesses from October 2027. Marketplaces will collect VAT on sales of goods to consumers by UK VAT-registered sellers, and by other UK sellers with more than £90,000 of annual sales on a platform. Personal sales, second-hand goods and B2B sales are excluded.
Updated November 2026: Budget 2026 on 28 October 2026 confirmed the extension, HMRC published a policy paper and a summary of consultation responses, and the threshold and start date will be set in secondary legislation in 2027 (Source).
What are the current UK marketplace VAT rules?
Since 1 January 2021, an online marketplace is treated as the seller for VAT on certain sales by overseas businesses. The marketplace charges the VAT and pays it to HMRC instead of the seller.
These deemed supplier rules sit in section 5A of the VAT Act 1994 (HMRC consultation). They apply in two cases (HMRC guidance):
- Imported consignments of £135 or less sold to customers in Great Britain through a marketplace. The marketplace is liable for the VAT, whoever the seller is.
- Goods of any value already in the UK at the point of sale, sold by an overseas business through a marketplace.
Consignments over £135 follow normal import VAT and customs rules. The same reform removed low value consignment relief (HMRC policy paper).
When the rules apply, the overseas seller is treated as making a zero-rated "deemed supply" to the marketplace and does not need to issue an invoice for it (HMRC guidance). The seller still pays import VAT when the goods first enter the UK and can reclaim it if VAT-registered. For more background, see our introduction to marketplace VAT.
Which sellers count as overseas?
HMRC defines an overseas seller as one that sells goods stored in the UK to UK customers and has no business establishment in the UK. Establishment is where the business's central administration operates, judged by where key management decisions are made, where the registered office is and where management meetings take place (HMRC guidance).
What about B2B sales?
If a business customer gives its UK VAT number, the marketplace does not charge VAT on imported consignments of £135 or less. The customer accounts for VAT under the reverse charge (HMRC guidance). For goods already in the UK, the 2021 policy paper says no reverse charge applies (HMRC policy paper).
Can marketplaces be liable for a seller's unpaid VAT?
Yes. Separately from the deemed supplier rules, HMRC can hold a marketplace jointly and severally liable for VAT an overseas seller should have paid.
This applies where the marketplace knew, or should have known, that the seller should be registered. HMRC can issue a liability notice. The marketplace then usually has 30 days to stop the seller from selling to UK customers to avoid being assessed. Marketplaces should also check sellers' VAT numbers and block sellers who have traded for 60 days without a valid one (HMRC guidance).
Marketplaces must also show they took "reasonable steps" to charge the right VAT, or they can be held liable for under-declared VAT (HMRC guidance).
How do the rules differ in Northern Ireland?
Northern Ireland follows EU rules for goods, so the marketplace tests differ. For goods in Northern Ireland at the point of sale, the marketplace is liable where the seller is not established in the UK or the EU (HMRC guidance).
Neither the June 2026 consultation nor the October 2026 policy paper mentions Northern Ireland. How the extension will apply there is not yet known.
What did Budget 2026 confirm for UK-established sellers?
Marketplaces will become liable for VAT on sales by UK-based businesses too, where the goods are in the UK at the point of sale and sold to a consumer. The government will legislate in Finance Bill 2026-27, with effect from October 2027 (Budget 2026 OOTLAR, measure 1.55). HMRC set out the detail in a policy paper on 28 October 2026 (HMRC policy paper).
| Item | What has been announced |
|---|---|
| Announced | Budget 2026, 28 October 2026 (measure 1.55) |
| Consultation | Ran 23 June to 18 August 2026; 67 responses; summary published 28 October 2026 |
| Start date | From October 2027; the exact date will be set in secondary legislation in 2027 |
| Scope | Sales of goods to consumers by UK businesses through marketplaces, where the goods are in the UK at the point of sale |
| Sellers in scope | UK VAT-registered businesses, whatever their platform sales; other UK businesses with more than £90,000 of annual sales on a platform |
| Out of scope | Personal sales by individuals not in business; second-hand goods; B2B sales; sales through a seller's own website or shop |
| Overseas sellers | Existing deemed supplier rules continue |
The summary of consultation responses confirms the £90,000 threshold, the exclusion of second-hand goods and the October 2027 start (summary of responses). It says HMRC will publish guidance on how the changes affect VAT accounting and reporting before the rules take effect.
Under the June consultation proposal, a sale by a UK business through a marketplace would be a deemed zero-rated supply from the business to the marketplace. The marketplace would charge VAT at the relevant rate and account for it on its own VAT return. Goods that are zero-rated today would stay zero-rated (HMRC consultation).
The consultation said sellers could still recover input VAT, including on costs linked to marketplace sales. Current rates are covered in our UK VAT rate guide.
Why is the government making this change?
HMRC estimates that "tens of thousands of businesses" selling through marketplaces are not meeting their VAT obligations, costing "hundreds of millions of pounds a year". It also cites evidence of networks helping overseas businesses "fraudulently appear as UK-established" so that platforms do not apply VAT (HMRC consultation).
The government says any revenue raised would go into improvements to the business rates system for high streets. The Budget 2026 costing is £165 million in 2027-28 and £320 million in 2028-29. HMRC expects about 100,000 businesses to be significantly affected (HMRC policy paper).
How does the £90,000 per-platform threshold work?
It only matters for UK sellers that are not VAT-registered. Marketplaces must account for VAT on sales by UK VAT-registered sellers whatever their sales on the platform. For other UK businesses, the marketplace is liable once annual sales on that platform exceed £90,000 (summary of responses).
The test is per platform. As we read it, a business that is not VAT-registered, with £40,000 of sales on one marketplace, stays outside the rules. A VAT-registered business with £20,000 of sales on a marketplace is inside them. The level of the threshold, how it operates and how sales are measured will be set in secondary legislation and guidance (HMRC policy paper).
The threshold does not change who must register. A UK business must still register once its taxable turnover for the last 12 months goes over £90,000 (GOV.UK). Our guide to becoming UK VAT registered explains the process.
The consultation also asked about a lower threshold and about VAT rate relief for small sellers. The government kept the £90,000 threshold and says it will monitor its impact after the rules start (summary of responses).
Current rules vs rules from October 2027, by seller type
The table below compares today's rules with the Budget 2026 announcement. Details, including the exact start date, will be set in secondary legislation in 2027.
| Seller and sale | Current treatment | From October 2027 (announced) |
|---|---|---|
| Overseas seller, imported consignment of £135 or less to a GB consumer | Marketplace is deemed supplier | Unchanged |
| Overseas seller, goods in the UK at point of sale | Marketplace is deemed supplier, any value | Unchanged |
| UK VAT-registered seller, B2C, any level of platform sales | Seller charges and accounts for VAT | Marketplace charges and accounts for VAT |
| UK seller not VAT-registered, platform sales over £90,000 a year | Seller should register and account for VAT | Marketplace charges and accounts for VAT |
| UK seller not VAT-registered, platform sales of £90,000 or less | No VAT if below the registration threshold | Outside the rules |
| Individual not in business | No VAT | Out of scope |
| UK business selling second-hand goods | Can use the Second-hand Margin Scheme | Excluded from the rules; margin scheme still available |
| B2B sales | Seller accounts for VAT | Excluded from the rules |
| Sales via own website or shop | Seller accounts for VAT | Unchanged |
| Goods in Northern Ireland | Marketplace liable if seller not established in the UK or EU | Not addressed |
What will change for Amazon and eBay sellers in the UK?
From October 2027, UK VAT-registered sellers, and unregistered UK sellers above the threshold, will see VAT on B2C marketplace sales collected by the platform instead of by them. Their own VAT return would then mainly show input VAT and sales through other channels.
The consultation response covers several points for VAT-registered sellers (summary of responses):
- Cashflow. Sellers with mostly marketplace sales could end up in a net repayment position. The government says businesses in scope can apply to move to monthly VAT returns.
- Flat Rate Scheme. Not decided yet. The government will take more time to consider how the scheme works alongside the extension.
- Pricing and systems. HMRC will publish guidance before the rules start. It estimates one-off costs for businesses of £40 million.
For how Amazon handles VAT today, see Amazon VAT: everything Amazon sellers need to know.
Is the change confirmed?
Yes. Budget 2026 announced it on 28 October 2026, and the government will legislate in Finance Bill 2026-27. The per-platform threshold and the implementation date will be set in secondary legislation in 2027 (Budget 2026 OOTLAR). The consultation has concluded, and a summary of responses is on the consultation page (GOV.UK).
Still unknown: the exact start date, how platform sales will be measured, the Flat Rate Scheme, Northern Ireland, and how marketplaces will verify where sellers are established.
What should UK marketplace sellers do now?
Nothing changes until October 2027, so keep filing as you do today. Use the time to understand your exposure.
- Check your VAT status and sales per platform. If you are VAT-registered, all your B2C marketplace sales of goods in the UK will be in scope. If not, check annual B2C sales on each marketplace against £90,000.
- Split your channels. Separate marketplace, own-website and B2B sales in your records.
- Model cashflow. Estimate your VAT position once marketplace output VAT moves to the platform, and consider whether monthly returns would help.
- Review schemes. Second-hand goods are excluded, so the margin scheme stays available for them. If you use the Flat Rate Scheme, watch for HMRC's decision.
- Keep your establishment evidence ready. Make sure your UK establishment details and VAT number are correct on each marketplace.
- Watch for the secondary legislation and HMRC guidance in 2027, which will set the start date and threshold rules.
Our UK VAT guide covers registration and filing basics.
Sources
- HMRC: Extending VAT online marketplace liability (policy paper, 28 October 2026)
- HM Treasury: Budget 2026 overview of tax legislation and rates, measure 1.55
- HMRC and HM Treasury: Extending online marketplace liability, summary of consultation responses (28 October 2026)
- HMRC and HM Treasury: Extending online marketplace liability to combat non-compliance (consultation page, 23 June 2026)
- HMRC and HM Treasury: Extending VAT online marketplace liability to combat non-compliance (consultation document)
- HMRC: VAT and overseas goods sold to customers in the UK using online marketplaces
- HMRC: Check when online marketplaces must carry out VAT checks on overseas sellers
- HMRC: VAT for overseas businesses using an online marketplace to sell goods in the UK
- HMRC: Changes to VAT treatment of overseas goods sold to customers from 1 January 2021 (policy paper)
- GOV.UK: Register for VAT
How Taxually handles this
CrossTax handles VAT registration and returns in the countries you sell into, pulling sales data from platforms such as Amazon and eBay and checking it with over 250 validation rules before filing. If marketplace VAT rules change for your sales, CrossTax helps you keep your own returns accurate.
Related guides:
Frequently asked questions
What are the deemed supplier rules in the UK?
Since 1 January 2021, an online marketplace is treated as the supplier for VAT on imported consignments of £135 or less sold to GB consumers, and on goods in the UK sold by overseas sellers. The marketplace charges and pays the VAT.
Do UK marketplace VAT rules apply to UK-established sellers today?
Not to goods already in the UK. UK-established sellers account for VAT on their own marketplace sales if they are VAT-registered. This changes from October 2027.
Is the extension to UK sellers law?
It was confirmed at Budget 2026 on 28 October 2026. The government will legislate in Finance Bill 2026-27, with the threshold and start date set in secondary legislation in 2027. It is due to apply from October 2027.
Would small sellers on Amazon or eBay be affected?
Only if they are VAT-registered or have more than £90,000 of annual sales on a platform. Sellers that are not VAT-registered and stay at or below £90,000 per platform are outside the rules.
Would sellers still reclaim input VAT?
The consultation said businesses would still be able to recover input tax. HMRC will publish guidance on VAT accounting and reporting before the rules take effect.
Are second-hand goods covered?
No. The government decided to exclude second-hand goods, so sellers can keep using the Second-hand Margin Scheme.
Does the extension cover Northern Ireland or B2B sales?
B2B sales are excluded; the rules cover sales of goods to consumers. The policy paper does not mention Northern Ireland.
