The UK is considering requiring online marketplaces to account for some sellers' VAT.
Why it matters: The proposal could shift VAT collection and reporting work from merchants to platforms. Its design would determine whether platforms merely collect and remit VAT or become legally liable for sellers' obligations.
- The Guardian reported a potential revenue estimate of up to £1 billion and a possible £90,000 annual turnover threshold per platform.
- Neither the £1 billion estimate nor the £90,000 threshold is an official costing or confirmed policy detail.
- The National Audit Office says VAT rules introduced in January 2021 covered certain overseas sellers and imported consignments worth £135 or less.
- The government factsheet describes consultation options including a minimum per-platform sales threshold and VAT-rate relief for businesses below the registration threshold.
The UK government is considering extending online-marketplace VAT rules so platforms could account for VAT on sales made through their services by UK businesses. The proposal would build on rules introduced in January 2021 for certain overseas sellers and imported consignments worth £135 or less, according to the National Audit Office.
Amazon and eBay have been named in reporting as platforms that could be affected. But collecting and remitting VAT at the point of sale is not the same as making a marketplace legally liable for a seller's tax debt. The policy's final mechanism has not been settled.
The Guardian reported that the measure could raise as much as £1 billion and apply to sellers with annual turnover above £90,000 per platform. Those figures come from media reporting, not an official costing or confirmed policy detail.
The government is consulting on a minimum per-platform sales threshold or VAT-rate relief for businesses below the VAT-registration threshold, according to its online-marketplace liability factsheet. Individuals selling second-hand goods outside a business are intended to remain outside the rules, while the treatment of second-hand-goods businesses remains under consideration.
The stated aim is to address VAT non-compliance and prevent businesses that do not pay what they owe from undercutting compliant online and high-street retailers. The proposal is not law and would require further decisions and possible legislation.
By the numbers
- £1 billion - maximum revenue estimate reported by The Guardian, not an official costing
- £90,000 - possible annual turnover threshold per platform, according to media reporting
- £135 - value of imported consignments covered by certain marketplace VAT rules introduced in January 2021
Yes, but: The government has not finalized the policy, the collection mechanism, the threshold or the legal allocation of VAT liability.
What's next: Further government decisions and possible legislation are required before the proposal could take effect.