On 23 June 2026, HMRC opened a consultation that could change who pays the VAT on the things you sell through an online marketplace. The plan would make platforms such as Amazon, eBay and Etsy account for the VAT on sales made by UK-based sellers, rather than leaving each seller to charge and pay it themselves.
This is a proposal, not yet law. The consultation closes on 18 August 2026, and nothing changes for now. But the direction of travel matters, because HMRC believes tens of thousands of UK marketplace sellers are not paying the VAT they should. This guide explains what is being proposed, who would be caught, the threshold that decides it, what is staying the same, and the practical steps a UK seller should take now.
What is HMRC's online marketplace VAT plan?
HMRC's plan would extend online marketplace VAT liability so that platforms account for the VAT on sales by UK-based businesses, not just overseas ones. The aim is to combat non-compliance HMRC estimates is costing the Exchequer hundreds of millions of pounds a year. It was published on 23 June 2026 and is open for consultation until 18 August 2026.
An "online marketplace" here means a platform that lets third parties sell goods to customers, such as Amazon, eBay, Etsy, OnBuy or Temu, and food-delivery apps that handle the sale. The idea is simple: shift the legal duty to collect and pay VAT from thousands of individual sellers onto a much smaller number of platforms that already process the money. For a fuller picture of how marketplaces already share seller data with HMRC, see our guide on how eBay reports to HMRC.
What are the current online marketplace VAT rules?
The current rules, introduced in 2021, only make marketplaces liable for VAT on goods sold by overseas sellers when those goods are in the UK at the point of sale, plus low-value imports of £135 or less sold directly to UK consumers. Sales by UK-established sellers are outside these "deemed supplier" rules today.
That is the gap the reform targets. A UK seller is currently responsible for their own VAT: registering when they cross the threshold, charging it, and paying it over. If they do not, HMRC has to chase each one. We explain how the existing deemed-supplier mechanism works in our guide to marketplace-collected VAT and whether you still file a return.
| Situation | Who accounts for the VAT today | Under the 2026 proposal |
|---|---|---|
| Overseas seller, goods in the UK at point of sale | The marketplace (since 2021) | The marketplace (no change) |
| Imported goods of £135 or less sold to a UK consumer | The marketplace (since 2021) | The marketplace (no change) |
| UK-based seller, goods in the UK at point of sale | The seller | The marketplace, if the seller is above the platform threshold |
| Private individual selling personal second-hand items | No VAT (not in business) | No change, out of scope |
Who would be affected by the new rules?
The reform would affect UK-based businesses making business-to-consumer sales on a marketplace where the goods are in the UK at the point of sale. HMRC estimates tens of thousands of such sellers are not meeting their VAT obligations. Compliant sellers should see little day-to-day change beyond who physically pays the VAT to HMRC.
If you sell on Amazon, eBay, Etsy or similar and you are VAT registered, your output VAT on those marketplace sales could in future be handled by the platform. You would still run your business, reclaim VAT on your costs and fees, and file returns. If you are not yet registered but are approaching the £90,000 threshold, read when you need to register for VAT, and if you are still working out whether your selling is a taxable trade at all, our HMRC side-hustle tax rules guide is the place to start.
What is the Minimum Platform Threshold?
The Minimum Platform Threshold is a proposed cut-off so that platforms only collect VAT for larger sellers. HMRC's lead option sets it at £90,000, the same as the current VAT registration threshold, though the consultation also explores a lower figure. Below the threshold, a seller keeps handling their own VAT under the existing rules.
The point of the threshold is to avoid forcing marketplaces to police VAT for the smallest traders, and to keep the rule aligned with when a business has to register for VAT in the first place. Because the figure is only illustrative, the final level could change once HMRC has weighed the responses. The standard VAT rate that would apply to most marketplace goods remains 20%.
What is not changing?
Private individuals selling their own second-hand belongings are not affected, because they are not in business and charge no VAT. The reform targets businesses, not people clearing out a wardrobe. HMRC is also consulting on whether to keep second-hand goods sold by VAT-registered businesses outside the new rules.
So if you occasionally sell personal items on eBay or Vinted, nothing here applies to you. The change is aimed at trading businesses above the platform threshold. If you are unsure which side of the line your selling falls on, the side-hustle tax rules explain when a hobby becomes a taxable business in HMRC's eyes.
When could the marketplace VAT changes start?
There is no start date yet. This is a consultation, the first formal step, running for eight weeks from 23 June 2026 to 18 August 2026. Any new law would follow later, after HMRC reviews the responses, and would normally be announced at a fiscal event such as a Budget before taking effect.
| Stage | When | What it means |
|---|---|---|
| Current rules introduced | 2021 | Marketplaces became liable for VAT on overseas-seller goods and low-value imports |
| Consultation opens | 23 June 2026 | HMRC proposes extending liability to UK-based sellers |
| Consultation closes | 18 August 2026 | Deadline for businesses and advisers to respond |
| Government response and any legislation | After August 2026 | Decision, draft rules and a start date would come later |
Any revenue raised is earmarked to fund improvements to the business rates system for high-street businesses such as pubs, restaurants and hotels.
What should marketplace sellers do now?
Because this is only a consultation, no action is mandatory yet, but it is a good prompt to get your VAT position clean and your numbers in order. Sellers who already have tidy records and a clear VAT status will adapt easily if the rules change. Work through these steps:
- Confirm your VAT status. Know whether you are registered, and whether you are near the £90,000 threshold. If you are close, plan for it now rather than crossing it by accident.
- Separate marketplace sales from direct sales. If you also sell through your own website, those direct sales would stay your responsibility, so keep them clearly split in your bookkeeping.
- Keep reclaiming VAT on your costs. Even if a platform handles your output VAT in future, you can still recover input VAT on stock, postage and platform fees. See VAT on Amazon seller fees.
- Tidy your record-keeping. Accurate sales, fee and payout records make any transition painless. Our Etsy accounting guide for UK sellers shows the kind of clean setup that helps.
- Respond if it affects you. The consultation is your chance to flag practical problems before the rules are written.
If you would rather hand the VAT side over entirely, our VAT services and bookkeeping services can keep your marketplace returns, records and registrations in order whatever the consultation decides.
What does this mean for ecommerce sellers? A worked example
For a busy UK ecommerce seller, the practical effect is mostly about who pays the VAT, not how much. Take a worked example. Daniel runs a homeware brand and sells through Amazon and eBay, with marketplace sales of £150,000 a year, so he is VAT registered and his goods sit in a UK warehouse.
Today, Daniel charges 20% VAT on his marketplace sales and pays it to HMRC on his returns. Under the proposal, because he is above the £90,000 platform threshold and his goods are in the UK at the point of sale, Amazon and eBay would instead account for that output VAT directly to HMRC, much as they already do for overseas sellers. Daniel would stay VAT registered, keep reclaiming the input VAT on his stock, postage and platform fees, and continue filing returns, but the output VAT on those marketplace sales would no longer pass through his own bank account first. The main thing he should do now is keep his marketplace and direct-website sales cleanly separated, because his own-site sales would still be his to handle. Sellers wanting the wider context on marketplace reporting should also read our guide on marketplace-collected VAT and filing.
Frequently asked questions
Will Amazon and eBay collect VAT for UK sellers?
Not yet. HMRC's June 2026 consultation proposes making marketplaces such as Amazon and eBay account for the VAT on UK-based sellers' sales, but it is only a proposal. The consultation closes on 18 August 2026, and any change would need new legislation and a start date before it applies.
What is the Minimum Platform Threshold for marketplace VAT?
The Minimum Platform Threshold is a proposed cut-off below which a seller keeps handling their own VAT. HMRC's lead option is £90,000, matching the current VAT registration threshold, though the consultation also considers a lower figure. The final level is not yet decided.
Does the marketplace VAT reform affect private sellers?
No. Private individuals selling their own second-hand belongings are not in business, charge no VAT, and are out of scope. The reform targets trading businesses above the platform threshold, not people occasionally clearing out personal items on sites like eBay or Vinted.
When would the online marketplace VAT changes start?
There is no start date. The consultation runs from 23 June 2026 to 18 August 2026, and any new rules would be decided and legislated afterwards, normally announced at a Budget before taking effect. For now, the existing VAT rules for UK marketplace sellers continue unchanged.
What should you do next?
The marketplace VAT reform is still a proposal, so there is no rush, but it is a clear signal to get your VAT position and bookkeeping in shape. Confirm your registration status, separate your marketplace and direct sales, and keep reclaiming the VAT on your costs. Get those basics right and any change will be a formality.
If you would like a second pair of eyes on your VAT setup before the rules tighten, book a free call with Zmartly and we will help you get marketplace-ready.
