The VAT registration threshold is £90,000. The number is simple. What trips up online sellers is what actually counts towards it.
Is it the money that lands in your bank, or the headline price the customer paid? Do Amazon and Shopify fees come off first? Do your zero-rated children's clothes count? What about sales spread across three different marketplaces? Getting any of these wrong is how sellers either register far too late, with a backdated bill, or panic and register when they didn't need to.
This guide is about exactly that question: what counts towards the £90,000 threshold when you sell online. It's written for UK ecommerce sellers on Shopify, Amazon, Etsy, eBay, TikTok Shop or your own site, especially anyone selling across more than one channel. If you want the wider "who is caught" picture for self-employment generally, see our guide to the VAT threshold for the self-employed. And once you know you're over, our guide on when to register for VAT walks through the timing and the process.
What is the VAT threshold for ecommerce sellers?
The VAT registration threshold is £90,000, and it is the same for ecommerce sellers as for any other UK business. There is no special online-seller figure. It's been at £90,000 since 1 April 2024, when it rose from £85,000.
It's measured on a rolling 12-month basis, so not the tax year and not your accounting year, but any 12 consecutive months. The catch for online sellers isn't the number itself; it's working out which of your sales count towards it. That's what the rest of this guide is about. (For the timing rules and the two registration tests, see our companion guide on when to register for VAT.)
What counts towards the £90,000 threshold?
This is the part that catches online sellers out. Your taxable turnover isn't the same as the cash that lands in your bank account.
Taxable turnover is the total value of everything you sell that isn't VAT-exempt or outside the scope of UK VAT. It includes your standard-rated (20%) and reduced-rated (5%) sales, and it also includes your zero-rated (0%) sales. For most ecommerce businesses that covers:
- Product sales through your website, Shopify store, Amazon, Etsy or eBay
- Delivery charges you pass on to customers
- Digital products, software and online courses
It does not include genuinely VAT-exempt income (such as some financial or insurance services), which is rare for a typical online seller.
Do platform and marketplace fees reduce your turnover?
No, and this is the single most common mistake we see. Your taxable turnover is the gross value of the sales you make, before Amazon, Shopify, Etsy or eBay take their cut. Marketplace fees and commissions are business expenses. They don't reduce the figure you test against the £90,000 threshold.
So if you sell £92,000 of standard-rated goods over 12 months and pay £11,000 in marketplace fees, your taxable turnover is £92,000, not £81,000. You're over the threshold and have to register, even though your net payout was lower.
The same logic applies to anything else deducted before the money reaches you: payment processing fees (Stripe, PayPal, Klarna), advertising costs billed by the platform, refunds you fund, and fulfilment charges. None of those reduce your turnover for the threshold test. Turnover is what the customer paid for the goods or service, gross.
Illustrative example. Sam runs an Amazon store selling standard-rated homeware. Over a rolling 12 months, customers pay Sam £92,000 for goods, and Amazon deducts £11,000 in FBA and referral fees, leaving an £81,000 payout. Sam's taxable turnover for the VAT test is the £92,000 of sales, not the £81,000 received. Sam has crossed £90,000 and must register.
One nuance worth knowing: the marketplace's own commission is a supply made to you, so once you're VAT-registered you may be able to reclaim VAT on those fees. But that's about input VAT after registration. It never reduces the turnover figure you test against £90,000 in the first place.
How do you total up multi-channel sales?
If you sell through more than one channel, the threshold looks at all of it together. There is no separate £90,000 allowance per platform. HMRC tests the total taxable turnover of your business, across every channel, as one figure.
This is the trap for sellers who feel comfortable because no single store is anywhere near £90,000. Add them up and the picture changes.
Illustrative example. Priya sells the same homeware range through three channels over a rolling 12 months: £40,000 on her own Shopify site, £35,000 on Etsy and £20,000 on eBay. No single channel is over £90,000, but her total taxable turnover is £95,000. Priya is over the threshold and must register. The fact that the sales are spread across three platforms makes no difference.
So to test yourself properly you need one combined rolling total that pulls every channel together: your own website, each marketplace, plus any offline or wholesale sales made by the same business. Reconciling those payouts into a single clean turnover figure is fiddly, which is exactly where it goes wrong. Our ecommerce bookkeeping keeps a consolidated rolling total across all your channels so nothing slips through the gaps.
Do zero-rated and international sales count?
Two more categories that catch ecommerce sellers out.
Zero-rated goods still count. If you sell zero-rated goods (most food, children's clothing and printed books), those sales count towards the £90,000, even though you'd charge VAT at 0% once registered. Zero-rated is not the same as exempt: a zero-rated sale is taxable, just taxed at 0%, so it counts. A seller turning over £100,000 of children's clothes is over the threshold and must register, even though their output VAT will be nil. If you're unsure how a product is rated, check the VAT rates guidance on gov.uk before you assume.
International sales are more nuanced. Exports of goods to customers outside the UK are generally zero-rated, and they do count towards your taxable turnover. Sales that are genuinely outside the scope of UK VAT (for example certain services supplied to overseas business customers) don't count. Because the treatment depends on what you sell and where the customer is, a meaningful share of overseas sales is worth checking carefully rather than guessing.
Who has to register for VAT?
Any UK business has to register once its taxable turnover goes over £90,000. The structure doesn't matter: sole traders, partnerships and limited companies are all caught by the same rule.
Two situations work differently:
Overseas sellers making taxable supplies into the UK generally face a nil threshold, so registration can be required from the first sale rather than at £90,000.
Sales into Northern Ireland or the EU can bring extra rules into play, including the deemed-supplier rules for online marketplaces and EU distance-selling regimes. If a meaningful share of your sales flows that way, get specific advice, because the position differs from straightforward UK domestic VAT.
When and how do you register?
Once you know your combined rolling turnover has crossed £90,000, the timing rules and the registration process are the same as for any business. In brief:
- Backward look. At the end of any month, if your taxable turnover for the previous 12 months has gone over £90,000, you must tell HMRC within 30 days of the end of that month, and you're registered from the first day of the second month after you went over.
- Forward look. If you expect your taxable turnover to go over £90,000 in the next 30 days alone, you must register by the end of that 30-day period.
Miss the deadline and HMRC can register you from the date you should have been registered, leaving you owing the VAT you never charged, plus a possible failure-to-notify penalty. That backdated bill is the painful part. A practical tip: set an alert in your bookkeeping software when your combined rolling turnover hits around £80,000, so you've time to plan.
We cover the registration steps, the two tests in full and whether voluntary registration is worth it for online sellers in our dedicated guide on when to register for VAT. This article stays focused on the question that comes first: what actually counts towards your £90,000.
How and when can you deregister?
If your taxable turnover drops below the £88,000 deregistration threshold and you expect it to stay there, you can apply to deregister. It isn't compulsory, and it isn't always the right move.
Plenty of growing ecommerce businesses stay registered through a temporary dip, because the input VAT reclaim on stock and ad spend is still worth having. If you deregister and then cross £90,000 again, you have to register all over again, which is needless hassle.
To deregister, you apply through your Government Gateway account. HMRC confirms your deregistration date, and from then you stop charging VAT.
Frequently asked questions
What is the VAT threshold in the UK? The VAT registration threshold is £90,000 of taxable turnover, measured on a rolling 12-month basis. It's been at that level since 1 April 2024.
Is the sole trader VAT threshold different from a limited company's? No. The same £90,000 threshold applies whatever your business structure. Sole traders, partnerships and limited companies follow the same rule.
Do Amazon and Shopify sales count towards the VAT threshold? Yes. Your taxable turnover is the gross value of the goods you sell, before platform fees and commissions are taken off. Those fees are an expense and don't reduce the figure you test against £90,000.
Do sales across different marketplaces count separately? No. There's no separate £90,000 allowance per platform. HMRC tests the total taxable turnover of your business across every channel as one figure, so you must add your Shopify, Amazon, Etsy, eBay and any other sales together when checking the threshold.
What happens if I register late? HMRC can register you from the date you should have registered, charge the VAT you should have collected and add a failure-to-notify penalty. If you think you've missed the deadline, contact HMRC or your accountant as soon as you can.
What's the deregistration threshold? You can apply to deregister if you expect your taxable turnover for the next 12 months to be below £88,000. One quiet month isn't enough; it needs to be a genuine expectation of sustained lower turnover.
Worried about crossing the VAT threshold?
Whether you're approaching £90,000 or weighing up voluntary registration, getting the timing right protects your cash flow. Talk to a Zmartly accountant about VAT for your store. Book a free 20-minute call through our ecommerce accounting page, and we'll tell you exactly where you stand.
