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May 21, 2026
Marketplace VAT for UK sellers could change under a new HMRC consultation opened on 23 June 2026. It proposes making online marketplaces such as Amazon and eBay collect and pay VAT on sales by UK-based businesses, not just overseas sellers. Nothing has changed yet, and the consultation closes on 18 August 2026.
- What HMRC’s marketplace VAT consultation proposes
- Why the government wants marketplaces to collect the VAT
- The two options being consulted on
- What marketplace VAT changes would mean for UK sellers
- What UK sellers should do now
- Frequently asked questions
If you sell through Amazon, eBay or another online marketplace, a change is being discussed that could move VAT collection out of your hands and onto the platform. It affects how the tax is collected, not whether it is due, but the knock-on effects for your cash flow and bookkeeping would be real. Here is what the consultation says, who it would touch, and what we suggest you do while it runs.
What HMRC’s marketplace VAT consultation proposes
On 23 June 2026, HMRC and HM Treasury opened a consultation called “Extending online marketplace liability to combat non-compliance”. It asks whether online marketplaces should become responsible for the VAT on goods sold by UK-based businesses, where those goods are already in the UK at the point of sale.
Today, that responsibility sits with you, the seller. You charge VAT, you report it, and you pay it to HMRC. The marketplace simply passes your money through. The one exception dates back to 2021, when platforms were made liable for the VAT on goods sold by overseas sellers. This consultation would widen that same mechanism to cover domestic sellers too.
The proposal reaches beyond classic retail. The published documents mention everyday goods and even takeaway food ordered through platforms, so the definition of an affected sale is broad. The key point is that this is a consultation, not a new rule. The government is asking for views on whether and how to do this, and the window closes at 11:59pm on 18 August 2026.
Why the government wants marketplaces to collect the VAT
HMRC’s case rests on lost tax. The department estimates that tens of thousands of UK-based businesses trading through marketplaces are not meeting their VAT obligations, with the shortfall running into hundreds of millions of pounds a year.
When a seller should be charging VAT but is not, they can undercut compliant rivals on price. That hurts honest sellers on the same platform and the high-street shops competing with them. The 2021 reform showed the model can work, because handing VAT collection to the marketplace sharply reduced non-compliance among overseas sellers. It also fits a wider pattern, given that HMRC already receives your sales data directly from the platforms.
That last point matters to you. Most of our clients pay exactly what they owe. A blanket rule that treats every UK seller as a compliance risk could add cost and admin for businesses that have done nothing wrong, which is precisely the tension the consultation is trying to resolve. If you want a refresher on where sellers commonly slip up, our guide to marketplace VAT traps is a good starting point.
The two options being consulted on
The consultation puts forward two main designs, and invites alternatives that meet the same goal.
The first is a minimum platform threshold. A marketplace would only become liable for your VAT once your sales through that platform pass a set value. Smaller sellers would carry on as they are, while larger ones would have VAT handled by the platform. The figure has not been set, and a per-platform threshold raises an obvious question for multi-channel sellers about how sales across several marketplaces would be added up.
The second is a VAT rate relief for businesses below the VAT registration threshold, which currently stands at £90,000 of taxable turnover. This would aim to protect genuinely small sellers from being pulled into VAT through the back door simply because a platform now accounts for it.
Both options are trying to solve the same worry, which is how to catch non-compliant traders without punishing the small, compliant seller. Which one wins, and where any threshold lands, will decide how much this actually affects your business.
What marketplace VAT changes would mean for UK sellers
If the rules change, the headline shift is simple. The marketplace, not you, would charge and pay the VAT on affected sales. The tax due would not change, but who handles it would.
The practical effects are where it gets real. Your VAT returns would change shape, because sales handled by the platform would be treated as a deemed supply and reported differently. Cash flow is the bigger one. At the moment you collect the VAT from the customer and hold that money until your return is due, which quietly helps working capital. If the platform collects it instead, that cushion disappears.
Your bookkeeping would need to keep pace too. Settlement files from Amazon, eBay and others would need remapping so VAT is recorded against the right party, and tools such as Link My Books or A2X, which our Amazon accounting team sets up for clients, would need their tax rules reviewed. Get this wrong and your accounts overstate VAT you no longer owe. None of this is here yet, but it is exactly the kind of change that is far cheaper to prepare for than to fix after the fact.
Worried about your VAT position? Our FCCA-chartered team handles marketplace VAT for UK ecommerce sellers every day. Book a free 30-minute call and we’ll review where you stand and what, if anything, this consultation means for you.
What UK sellers should do now
The honest answer is that nothing changes today, and you should be wary of anyone telling you to act in a panic. The rules are still being written, they may shift before anything becomes law, and there is no start date.
A few sensible steps cost nothing. Check that your current VAT position is correct, because if there is a genuine gap it is far better to fix it now than to have a platform expose it later. Make sure your bookkeeping records VAT cleanly by sales channel, so any future change is a settings update rather than a rebuild. And if you sell across several marketplaces, keep an eye on the threshold question, since a per-platform rule could affect you differently from a single-shop seller. A quick review of your VAT position now will pay for itself either way.
You can also respond to the consultation directly before 18 August 2026, through the online form or by email to HMRC. If you would like us to review your VAT or submit a response on your behalf, that is something our team can handle.
Frequently asked questions
Is marketplace VAT changing for UK sellers right now?
No. As of June 2026 this is a consultation, not a law. HMRC is gathering views until 18 August 2026, and any change would come later through separate legislation. For now you charge, report and pay VAT exactly as you do today. We will update this article when there is firm news.
Will I still need to be VAT registered if the marketplace collects the VAT?
Most likely yes, at least for now. The consultation is about who accounts for VAT on a sale, not about removing your registration. You may still have VAT to handle on sales outside the affected marketplaces, on your costs, and on reclaiming input VAT. Treat your registration as unchanged until the rules are finalised.
Does this affect private sellers or second-hand sales?
Sales by private individuals, including most second-hand items, are out of scope. The consultation targets business sellers whose goods are in the UK at the point of sale. How second-hand goods sold by businesses would be treated is still being decided, so margin-scheme sellers should watch this point closely.
Which marketplaces would the new rules apply to?
The proposal targets online marketplaces that facilitate sales, which would cover large platforms such as Amazon, eBay and Etsy. The exact definition is part of what the consultation is settling. If a platform handles the transaction between you and the buyer, assume it could fall within scope.
When could the new marketplace VAT rules start?
There is no start date. The consultation closes on 18 August 2026, after which the government will review responses and decide whether to proceed. Any change would then need to be legislated, so a realistic timeline runs into 2027 at the earliest. Nothing is confirmed yet.
How can I respond to the HMRC consultation?
You can reply through the online form on the gov.uk consultation page, or email HMRC directly, before the 18 August 2026 deadline. Sellers, agents and trade bodies are all welcome to comment. If you would like help putting a response together, our team can draft and submit one for you.
Talk to a UK ecommerce accountant
If you’d like a hand applying any of this to your business, our FCCA-chartered team works with over 700 UK ecommerce sellers across Amazon, Shopify, eBay and TikTok Shop. Tell us about your store and we’ll show you exactly what we’d do. Book a free consultation or request a tailored quote.
