If you're a UK business seller, you don't apply the reverse charge to your eBay fees. eBay (UK) Limited supplies your selling services and adds 20 per cent UK VAT to the fees it bills you. If you're VAT-registered, that VAT is ordinary input tax: you reclaim it on your VAT return like the VAT on any other UK supplier's invoice.
The reverse charge advice still circulates because it used to be right. Until 1 August 2017, UK business sellers were billed by eBay's Luxembourg company and their fee invoices carried no UK VAT. Bookkeeping set up from old guidance can still be treating eBay as an overseas supplier, and that quietly costs you the VAT you're entitled to reclaim.
In short: put the VAT shown on eBay's fee invoices in Box 4 and the net fees in Box 7. Nothing goes in Box 1 or Box 6 for the fees. The reverse charge only applies where the supplier belongs outside the UK, and eBay (UK) Limited doesn't (VAT Notice 741A, paragraph 5.3).
Who supplies your eBay fees?
eBay (UK) Limited. eBay's User Agreement says that if you live in the UK, you're contracting with eBay (UK) Limited, a London company with the UK VAT number GB 365 6085 76 (eBay User Agreement). Its business seller fees are listed exclusive of VAT, and the VAT is added on your invoice (eBay fees for business sellers).
The change dates from 1 August 2017. That day eBay announced that business sellers with a UK-registered address would contract with eBay (UK) Limited, and that it would add UK VAT at 20 per cent to all fees billed to them. Non-business sellers were already paying it (eBay announcement, 1 August 2017).
Why doesn't the reverse charge apply?
The reverse charge is for services you buy from a supplier that belongs outside the UK. HMRC's conditions are that the place of supply is the UK, the supplier belongs outside the UK, you belong in the UK and the supply isn't exempt (VAT Notice 741A, paragraph 5.1).
eBay (UK) Limited fails the second test. HMRC puts it plainly: "The reverse charge does not apply to supplies of services where both the supplier and the customer belong in the UK" (VAT Notice 741A, paragraph 5.3). So eBay charges the VAT and you reclaim it. You don't charge it to yourself.
Which VAT-return boxes do eBay fees go in?
Two boxes, not four.
| VAT-return box | What it's for | eBay fees |
|---|---|---|
| Box 1 | VAT due on sales and other outputs | Nothing |
| Box 4 | VAT reclaimed on purchases and other inputs | The VAT shown on eBay's fee invoices |
| Box 6 | Total value of sales, excluding VAT | Nothing |
| Box 7 | Total value of purchases, excluding VAT | The net fees |
That's the ordinary treatment for a purchase from a UK supplier (VAT Notice 700/12, paragraphs 3.5 and 3.8). The reverse charge would add the fees to Box 1 and Box 6 as well, as though you'd sold them to yourself. For eBay's UK fees, that's wrong.
You can reclaim the VAT if you're VAT-registered, not on the Flat Rate Scheme, and the fees relate to your taxable sales. You need eBay's VAT invoice to support the claim, and our guide on how to reclaim VAT on eBay fees shows where to find it.
Worked example: a quarter of eBay fees
Illustrative example. Priya runs a homeware shop on eBay and is VAT-registered on standard accounting. Over her VAT quarter, eBay's fee invoices show net fees of £1,250.00 plus VAT of £250.00, so £1,500.00 in total comes out of her payouts.
| Box | Entry for the fees | Amount |
|---|---|---|
| Box 1 (VAT on sales) | Nothing | £0.00 |
| Box 4 (VAT reclaimed) | VAT on eBay's invoices | £250.00 |
| Box 6 (net sales) | Nothing | £0.00 |
| Box 7 (net purchases) | Net fees | £1,250.00 |
Her VAT bill for the quarter falls by £250.00. Her real cost is the £1,250.00 net fee, and that's the figure in her profit and loss account.
The journal behind it, if you post it by hand:
| Account | Debit | Credit |
|---|---|---|
| Selling fees (expense, net) | £1,250.00 | |
| VAT input tax (Box 4) | £250.00 | |
| eBay (taken from payouts) | £1,500.00 |
Now the version worth catching. Say Priya's software still codes eBay as a reverse charge supplier and treats the £1,500.00 she paid as the net fee. It puts £300.00 in Box 1 and £300.00 in Box 4, and £1,500.00 in Box 6 and Box 7. The two VAT boxes cancel, so she gets no credit for the £250.00 eBay actually charged her. Her Box 6 sales are overstated by £1,500.00, and her costs by £250.00.
What if an eBay invoice shows no VAT?
Work from the invoice in front of you, not from what you expect it to say. If an eBay fee invoice reaches you without UK VAT on it, don't reverse charge it on autopilot. Check which eBay company issued it and that eBay holds your business details correctly, then raise it with eBay before you post it. eBay asks sellers to keep their name, legal entity, VAT ID and registration address accurate (eBay tax policy).
I've been reverse charging my eBay fees. What now?
Change the coding from your next return, then look back. If past returns reverse charged invoices that carried UK VAT, you've probably paid more VAT than you owed and overstated Box 6. That's an error to correct, not just a habit to drop.
The rules are in VAT Notice 700/45. You can usually correct a net error on your next return if it's £10,000 or less, or up to £50,000 if it's no more than 1 per cent of the Box 6 figure on the return where you find it. Anything bigger is reported to HMRC separately. Corrections can go back four years.
Do eBay fees count towards the VAT registration threshold?
No. The threshold tests your taxable turnover, which is what you sell. Fees you pay eBay are a cost. The rule that adds bought-in services to your turnover is for services from overseas suppliers under the reverse charge (VAT Notice 741A, paragraph 5.7), and eBay's UK fees aren't that.
What does count is your full sales, before eBay takes its fees, not the payouts that reach your bank. You must register if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone (gov.uk: Register for VAT).
If you're not registered, the VAT eBay adds is part of what the fee costs you, because there's nothing to reclaim it against. The same goes for the Flat Rate Scheme, where you don't recover input tax on purchases like these (VAT Notice 733, paragraph 2.4).
How to code eBay fees in your bookkeeping software
Code eBay's fee bills to the standard 20 per cent rate for purchases, the same as any UK supplier. Don't use a reverse charge code: that's what puts the fees into Box 1 and Box 6. If a connector brings your eBay settlements into Xero or QuickBooks, check how it maps the fee lines, because a setup copied from an overseas platform may still be posting a reverse charge.
A quarterly check catches it. The fees and VAT on eBay's invoices for the period should agree to the fees and input VAT in your ledger, and if they don't, find out why before you file. Our guide to completing your full VAT return walks through every box, and our bookkeeping service reconciles marketplace fees every period.
When does the reverse charge apply to a seller's costs?
When a supplier that belongs outside the UK supplies a service to your UK business. Its invoice will normally show no UK VAT. Then you put the VAT in Box 1 and Box 4 and the net value in Box 6 and Box 7 (VAT Notice 700/12, paragraph 4.6). The test is where the supplier belongs, so check each platform and app invoice on its own. Amazon moved UK-established sellers' fees onto UK VAT on 1 August 2024, and our guide to VAT on Amazon seller fees covers that change. If you also sell on Shopify, see our guide to VAT on Shopify fees.
Frequently asked questions
Do I apply the reverse charge to my eBay fees?
Not as a UK business seller. eBay (UK) Limited supplies your selling services and adds 20 per cent UK VAT to your fees. The reverse charge only applies where the supplier belongs outside the UK (VAT Notice 741A, paragraph 5.3). If you're VAT-registered, you reclaim eBay's VAT as input tax.
Which VAT-return boxes do eBay fees go in?
The VAT on eBay's fee invoices goes in Box 4 and the net fees go in Box 7. Nothing goes in Box 1 or Box 6 for the fees, because they're a purchase from a UK supplier, not a reverse charge.
When did eBay start charging UK VAT on its fees?
For business sellers, on 1 August 2017, when those with a UK-registered address moved to eBay (UK) Limited. Before that they were billed from eBay's Luxembourg company with no UK VAT, which is where the reverse charge advice comes from. Non-business sellers were already paying UK VAT on their fees.
What rate of VAT does eBay charge on its fees?
The UK standard rate, 20 per cent for 2026/27. You can reclaim it if you're VAT-registered, not on the Flat Rate Scheme, and the fees relate to your taxable sales.
Can I reclaim it if I'm not VAT-registered or on the Flat Rate Scheme?
No. If you're not registered, the VAT is part of what the fee costs you. On the Flat Rate Scheme you don't recover input tax on purchases like these either (VAT Notice 733, paragraph 2.4).
Do eBay fees count towards the VAT registration threshold?
No. The £90,000 test is on your taxable turnover, which is what you sell. Fees you pay eBay are a cost. Count your full eBay sales before fees, not the payouts that reach your bank.
How do I code eBay fees in Xero or QuickBooks?
To the standard 20 per cent rate for purchases, like any UK supplier's bill. A reverse charge code is wrong for eBay's UK fees, because it posts them to Box 1 and Box 6 as well.
Get your eBay VAT right
eBay's fee VAT is simple once the coding is right: reclaim it like any other UK supplier's VAT. If you'd like it checked every quarter, book a call with a Zmartly accountant and we'll set up your eBay bookkeeping so the fees, the VAT and the boxes agree. Start at our page for eBay sellers.
