Tax Obligations for Sellers on TikTok Shop UK in 2025

As a seller on TikTok Shop UK in 2025, understanding your tax obligations is crucial for compliance and smooth operation of your business. Here’s a comprehensive guide to help you navigate the tax landscape.

Value Added Tax (VAT)

1. VAT Registration:
   • If your business turnover exceeds the VAT registration threshold of £90,000, you are required to register for VAT with HM Revenue and Customs (HMRC). Even if your turnover is below this threshold, you can choose to register voluntarily.
   • Once registered, you must charge VAT on all eligible sales, and you can reclaim VAT on business-related purchases and expenses.
2. Charging VAT:
   • For UK-based sales, you must include the standard VAT rate (currently 20%) in the price of your goods. Some items may be zero-rated or reduced-rated (e.g., children’s clothing or books), so ensure you categorize your products correctly.
   • Display VAT-inclusive prices on TikTok Shop to avoid confusion for customers.
3. VAT on Exports:
   • If you sell goods to customers outside the UK, these sales are usually zero-rated for VAT. This means you do not charge VAT, but you must keep proof of export to support this in your VAT return.
   • For sales to EU customers, the rules are more complex due to the EU’s VAT e-commerce package. You may need to register for VAT in each EU country where you sell goods or use the One-Stop Shop (OSS) to simplify compliance.
4. VAT on Imports:
   • If you source goods from outside the UK, you may need to pay import VAT and customs duties. This VAT can be reclaimed if you are VAT registered.

Income Tax and Corporation Tax

1. Income Tax:
   • If you are a sole trader, your business profits are subject to income tax. You need to file a Self Assessment tax return annually, declaring your income and expenses.
   • Keep accurate records of all sales and expenses to ensure you can claim all allowable deductions and reduce your taxable income.
2. Corporation Tax:
   • If your business is a limited company, it will be subject to corporation tax on its profits. The current corporation tax rate is 19%.
   • As a director, you may also be subject to income tax on any salary or dividends you take from the company.

National Insurance Contributions (NICs)

1. For Sole Traders:
   • You must pay Class 2 NICs if your profits are above a certain threshold (£6,725 for 2024/25). Class 4 NICs are also payable on profits above £9,568.
2. For Limited Companies:
   • Employers (the company) must pay Class 1 NICs on employee salaries. As a director, you are also an employee and subject to these contributions.

Compliance and Record-Keeping

1. Record-Keeping:
   • Maintain detailed records of all transactions, including sales, expenses, and VAT. This is essential for accurate tax reporting and compliance.
   • Use accounting software to streamline record-keeping and ensure you meet Making Tax Digital (MTD) requirements if applicable.
2. Filing and Deadlines:
   • File VAT returns quarterly if you are VAT registered. Income tax returns (Self Assessment) are due annually by January 31st for the previous tax year.
   • Corporation tax returns are due 12 months after the end of your accounting period, with payment due 9 months and one day after the end of the period.

Conclusion

Selling on TikTok Shop UK offers great opportunities, but it also comes with tax obligations that must be diligently managed. Ensuring compliance with VAT, income tax, and corporation tax regulations will help you avoid penalties and keep your business running smoothly. Consider consulting with an ecommerce accountant to ensure you meet all legal requirements and take advantage of any tax reliefs available to you.