Registration, VAT returns, fees and imports, explained for sellers on Amazon, Shopify, eBay, Etsy and TikTok Shop.
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A UK business selling from UK stock must register once its taxable turnover passes £90,000 in any rolling 12 months. A business based outside the UK has no threshold and must register as soon as it sells goods stored in the UK, although a marketplace collects the VAT on many of those sales.
Find the row that describes your business and go to its section. Many sellers fit more than one row.
A UK business must register once its VAT-taxable turnover goes over £90,000 in any rolling 12-month period. The test runs at the end of every month and looks back 12 months, whatever your accounting year or tax year. A second test looks forward: if sales in the next 30 days alone will go over £90,000, registration starts from the day you realise it.
Common mistakeMeasuring the threshold against payouts. Turnover is the full price customers pay, before marketplace fees, FBA fees and ad spend come off. Steve's Amazon payouts for the year total £78,000, so he thinks he is well under. His customers paid £96,000 before Amazon took its fees, and he went over the threshold months ago.
Sales on every channel add up together, and zero-rated sales such as books and children's clothes count too.
Samantha sells on Amazon and through her own Shopify store. Her combined sales for the 12 months to 31 March come to £91,200. She has until 30 April to tell HMRC, and she is VAT registered from 1 May.
Two points catch sellers out:
The most common mistake I see is registering for VAT without looking at prices. VAT comes out of the full price the customer pays, before marketplace fees. If your prices stay the same, one-sixth of every sale comes straight out of your margin. I've seen profitable products sell at a loss for months because nobody checked.
Registering before you reach the threshold can save money. A registered seller reclaims VAT on stock, Amazon fees and most advertising, but adds 20% VAT to sales to consumers. Voluntary registration tends to suit sellers whose customers are mostly businesses, and sellers of zero-rated goods, who charge no VAT but reclaim it on their costs.
Non-UK businesses have no threshold at all. See VAT for non-UK businesses.
Registration is online, through HMRC's VAT registration service. A limited company needs:
A sole trader needs much the same, plus a National Insurance number and an identity document such as a passport. Step-by-step guide: How to register for UK VAT
HMRC sends a 9-digit VAT number and a VAT certificate. The wait runs to weeks, and HMRC's check when you can expect a reply page gives the current timescale. Registration also signs you up for Making Tax Digital, so returns go through software from the start. Where to find your VAT certificate online
VAT is due from your effective date of registration, not from the day the number arrives. In the gap, price your sales to cover the 20% but leave VAT off any invoices. Once the number arrives, business customers can be sent replacement invoices that show the VAT.
Registration also lets you reclaim VAT paid before your effective date. Stock counts if you bought it in the previous four years and still had it on the effective date. Services count if you paid for them in the previous six months.
Claire's effective date of registration is 1 June. Earlier in the year she bought 1,000 units at £12 + VAT (£2.40) each, £2,400 of VAT in all. She had sold 600 by 1 June, leaving 400 in stock. In the six months before, she paid a web designer £1,500 plus £300 VAT and a UK warehouse a £500 set-up fee plus £100 VAT.
Her first return reclaims £960 on the stock (400 units × £2.40) and £400 on the services, £1,360 in all. A stock record showing what was bought, sold and left backs up the claim.
Add the number to each marketplace account as soon as it arrives. Amazon needs it before it can issue VAT invoices to business buyers for you.
Give it to overseas digital service providers too. Many charge 20% UK VAT to anyone without a VAT number, treating them as a consumer. With a valid number they stop charging VAT and the reverse charge applies instead. You record the VAT on your return and reclaim the same amount on that return. Klaviyo, Adobe, Typeform, Anthropic, Etsy and Shopify all work this way.
Most online sellers are better off on the standard scheme, because it lets them reclaim the VAT on stock, marketplace fees and advertising. The other schemes suit particular cases, so check the numbers before switching.
You charge VAT on sales, reclaim VAT on costs and pay HMRC the difference each quarter. Every newly registered business starts here.
You pay HMRC a fixed percentage of your VAT-inclusive sales and reclaim no VAT on costs, apart from capital items over £2,000. Online retailers usually use the 7.5% rate for retailing, with a 1% discount in the first year of VAT registration. Businesses with VAT taxable turnover of £150,000 or less can join.
Rachel sells on Amazon. In one quarter her customers pay £30,000, including £5,000 of VAT. She pays £15,000 for stock, including £2,500 of VAT, and £4,500 in Amazon fees, including £750 of VAT. On the standard scheme she pays HMRC £1,750. On the Flat Rate Scheme she pays £2,250, which is £500 more.
Amazon has charged VAT on its fees since August 2024, which makes the standard scheme better value still. The scheme also charges its percentage on zero-rated sales, so sellers of coffee or children's clothes rarely gain. Watch for the limited cost business rule: if goods cost less than 2% of turnover, the rate rises to 16.5%. Stock bought for resale counts as goods, so most product sellers avoid it. If marketplaces start collecting VAT in October 2027 as planned, the scheme's sums may change again. Flat Rate Scheme or standard scheme: which suits you?
Cash accounting: VAT follows the cash, so it helps mainly with business customers on credit terms. Turnover up to £1.35 million.
Annual accounting: one return a year, with advance payments through the year. Turnover up to £1.35 million.
A VAT-registered seller charges 20% VAT on most sales and reclaims the VAT on business costs. Prices to consumers include the VAT, so dividing a price by six gives the VAT inside it. A £24 sale includes £4 of VAT and £20 of sales. Postage charged to the customer follows the VAT rate of the goods, so delivery on a standard-rated item carries 20% too. How to calculate VAT on your Amazon sales price
On costs, the treatment varies by provider and by fee. One marketplace can bill commission, fulfilment, a subscription and advertising on separate invoices, each with its own VAT treatment. VAT can be reclaimed only where an invoice shows it, so check each invoice type, not the monthly statement.
Some overseas providers charge no UK VAT and apply the reverse charge instead. The seller records the VAT in box 1 of the return and reclaims the same amount in box 4, so it costs nothing, but both entries must be made. The net fee also goes in boxes 6 and 7. For sellers who are not VAT registered, these fees count towards the £90,000 threshold until 1 April 2027.
The table covers each provider's UK business. The same company can bill differently from another country: an Amazon seller advertising on Amazon.de, for example, pays German VAT until Amazon has their UK VAT number, and the reverse charge applies after that. Check the invoice itself, because the supplier and its country decide the VAT. Amazon's North American sites bill under the reverse charge, so UK VAT on one of those invoices is usually a mistake to raise with Amazon support.
Amazon started charging 20% UK VAT on its fees to UK sellers in August 2024. What changed with Amazon's VAT on fees
Most sellers file a VAT return every three months. The return and the payment are both due one calendar month and seven days after the quarter ends. HMRC sets your quarter dates at registration, in one of the three patterns below. Sellers who are usually owed VAT, such as those selling zero-rated goods, can ask to file monthly and get repayments sooner.
Every VAT-registered business must keep digital records and file through software that works with Making Tax Digital (MTD). Figures must pass between programs by digital links, not be retyped. For marketplace sellers, sales and fee data should reach the accounting software through a connector, not a spreadsheet keyed in by hand. Making Tax Digital for VAT: what Amazon sellers need to do
We file every client's VAT return through MTD-compatible software. More on our ecommerce VAT service
Boxes 2, 8 and 9 cover goods moving between Northern Ireland and the EU, and stay at zero for most sellers. Box 3 adds boxes 1 and 2.
Paying by Direct Debit is the simplest route. HMRC collects three working days after the deadline, as long as the Direct Debit was set up at least three working days before the return was filed. How to pay HMRC your VAT
Late payment costs money from day one.
Late returns cost too. Each late return adds a penalty point, and a quarterly filer who reaches four points pays £200 for that return and every late one after it.
Stock brought into Great Britain from outside the UK carries import VAT, normally 20%, on its value plus shipping and any customs duty. A VAT-registered seller can reclaim it, but how it is paid decides whether cash leaves the business first.
Postponed VAT accounting (PVA) lets a VAT-registered business account for import VAT on its VAT return instead of paying it at the border. The same amount goes in box 1 and box 4, so for most sellers it nets to nothing. Without PVA, the freight forwarder or courier pays the VAT at the border and recharges it, and the seller waits until the next return to reclaim it.
James imports a container of stock worth £40,000 including shipping and duty. Without PVA he pays £8,000 of import VAT before the goods are released and reclaims it up to four months later. With PVA no VAT is paid at all.
Tell your freight forwarder to use PVA on every shipment. HMRC publishes a monthly postponed import VAT statement, usually by the 10th working day of the month. It stays online for six months only, so download each one and keep it with your records. The statement, not the forwarder's invoice, is the evidence for the figures on your return. What is postponed VAT accounting?
Every business importing into Great Britain needs an EORI number, applied for on GOV.UK. Customs declarations cannot be made without one.
Customs duty is a separate tax from VAT. Its rate depends on the commodity code and where the goods were made, and it cannot be reclaimed, so it belongs in your cost of stock. Sellers who are not VAT registered pay import VAT at the border and cannot reclaim it either. Work out the landed cost of FBA stock
Matt, Bookkeeper, and Asa, Head of Operations
Since 1 January 2021, online marketplaces have collected the VAT on two kinds of sale to UK consumers instead of the seller:
In both cases the marketplace adds the VAT at checkout and pays it to HMRC, and the seller is paid without it.
Because of these rules, Amazon asks sellers to prove they are established in the UK. It looks for a business run from a physical UK address, and for limited companies it checks where the directors live. A UK company run from abroad can fail the check. Amazon then treats it as an overseas seller, collects VAT on its sales and can look back to 2021 for VAT it says is owed. Sellers usually have 30 days to send documents once Amazon asks. Amazon's UK VAT checks explained
The government plans to extend the rules to UK businesses from October 2027, to tackle sellers who don't register or under-declare their VAT. Under the plans, marketplaces would collect VAT on sales by UK sellers who are VAT registered, or who sell more than £90,000 a year on any one platform. Second-hand goods, personal sales and sales to other businesses stay outside the change. The change still needs legislation, so the details could change before then.
For a compliant seller, the main effect is cash flow. At the moment the VAT on marketplace sales reaches the seller's bank and is paid to HMRC after the quarter ends. From October 2027 the marketplace would pay it instead. That VAT was never the seller's money, but many use it as working capital in the meantime. Sales through your own website, such as a Shopify store, are not affected. HMRC will publish the detailed accounting rules before the start date. Marketplace VAT from October 2027
As the plans stand, the switch should happen automatically, so there's little to change on compliance. The bigger change is cash flow. Today the VAT on your marketplace sales sits in your bank until your return is due. From October 2027 the marketplace keeps it. Work out how much you rely on that cash now. If you expect to be reclaiming VAT each quarter, plan to switch to monthly returns when the change starts.
A parcel sent from the UK to an EU customer is an export from the UK and an import into the EU. The UK sale is zero-rated as an export, as long as you keep proof the goods left the UK. The customer's country charges import VAT at its own rate, from 17% to 27%, and EU customs rules decide who pays and when. How VAT works in Europe
The Import One Stop Shop (IOSS) lets you charge the customer's VAT at checkout and pay it through one monthly return for all EU sales. A UK business needs an EU-based intermediary to register. On sales through an EU marketplace such as Amazon.de, the marketplace collects the VAT instead. Without IOSS, the carrier collects the VAT from the customer on delivery, usually with an admin charge, and some customers refuse to pay it.
Since 1 July 2026 these parcels have also carried a temporary €3 customs duty for each type of product in the parcel, due to end on 1 July 2028.
These need a full customs declaration, with import VAT and normal customs duty in the customer's country. The customer pays on delivery, unless you ship with duties paid and build the cost into your price.
Since 1 November 2026, every parcel sold to an EU customer from outside the EU carries a €2 handling fee for each type of product in it, whatever the parcel's value. Whoever makes the customs declaration pays it, which is the IOSS holder where there is one.
A €60 parcel holding a T-shirt and two identical mugs has two types of product, so it carries €6 of duty and €4 of handling fees. The EU handling fee explained
Storing stock in the EU, through Pan-EU FBA or an EU warehouse, means registering for VAT in each country where it is kept, usually alongside the EU One Stop Shop (OSS) for sales across borders. We don't handle EU registrations or returns, but we can introduce you to specialist partners. Ask us for an introduction.
TikTok Shop sellers can follow our EU VAT and customs checklist.
Kyle, Junior Accountant, and Joe Cox, Managing Partner
A business based outside the UK has no VAT registration threshold. HMRC calls it a non-established taxable person (NETP), and it must register as soon as it makes a taxable sale in the UK, however small. UK VAT for non-UK businesses
HMRC looks at where a business is run, not where it is incorporated. A UK limited company whose directors make the key decisions abroad, with only a registered office or virtual address in the UK, may be treated as an NETP. It then has no threshold, and Amazon may treat it as an overseas seller too. If your UK company is run from abroad, our accounting service covers it.
On goods stored in the UK and sold to UK consumers, the marketplace collects the VAT. Sales to VAT-registered business buyers are different. The seller charges and accounts for UK VAT, which needs a UK VAT number. HMRC allows marketplaces to remove sellers they know should be registered, and in practice marketplaces insist that non-UK sellers with UK stock provide a UK VAT number before they can sell on the platform.
Sales from stock already in the UK are taxed like any UK sale. On parcels of £135 or less sent from abroad, you charge UK VAT at checkout, so you need a UK VAT registration. Above £135, import VAT is due at the border.
Many overseas businesses don't realise that when they send parcels worth £135 or less from abroad to UK customers through their own online store, they must charge UK VAT at checkout. That means registering for UK VAT from the first UK sale, not dealing with it at the border.
Importing stock needs an EORI number. Once registered for VAT, use postponed VAT accounting so import VAT goes through your VAT return instead of being paid at the border. See Importing stock.
Our VAT service for non-UK businesses covers VAT and EORI registration, preparing and submitting your UK VAT returns, help with HMRC compliance checks and ongoing advice.
The same rules apply on every platform, but each has its own details. Find yours below, with links to our platform guides and services.
Amazon charges 20% UK VAT on selling and FBA fees, which a VAT-registered seller reclaims. Stock in Amazon's EU warehouses needs VAT registrations in those countries, and from October 2027 Amazon is due to collect the VAT on UK marketplace sales.
On your own store you charge and account for all the VAT yourself, and the October 2027 marketplace change does not apply. Shopify bills its fees from Ireland, so add your VAT number to move them onto the reverse charge.
eBay charges 20% UK VAT on fees to business sellers. From October 2027 eBay is due to collect the VAT on your sales if you are VAT registered or sell over £90,000 a year on eBay, but second-hand goods stay outside the change.
Etsy bills its fees from Ireland and adds 20% UK VAT until it has your VAT number, then the reverse charge applies. Sales on Etsy count towards the £90,000 threshold together with every other channel.
TikTok Shop sales count towards the threshold like any other channel, and TikTok Shop counts as an online marketplace, so the planned October 2027 change would apply to it. Affiliate commission is paid to creators, so any VAT on it depends on whether the creator is VAT registered.
Goods sent straight from an overseas supplier to a UK customer in parcels of £135 or less are subject to UK VAT, collected at the point of sale by you (once you're VAT-registered), or by the marketplace you made the sale on. Above £135, import VAT is due at the border, so agree with your supplier and/or shipping provider who is responsible.
Figures and dates below were last checked on 6 November 2026, after the Autumn Budget on 28 October 2026. We update them after each Budget.
EU €3 customs duty per type of product on parcels of €150 or less, until 1 July 2028
EU €2 handling fee per type of product, on parcels of any value
Reverse charge on overseas services applies only to VAT-registered businesses
Planned: marketplaces collect VAT on sales by UK sellers who are VAT registered or sell over £90,000 a year on one platform. Still needs legislation
VAT invoices must be issued as e-invoices. HMRC will set out the detailed rules and any exemptions later
Not UK VAT. A parcel to an EU customer is a zero-rated export from the UK, as long as you keep proof it left the UK. The customer's country may charge its own VAT, which you can collect at checkout through IOSS on parcels worth €150 or less. EU rules vary by country, so speak to an EU VAT specialist. We can introduce you to one.
Amazon UK's fees do. Since 1 August 2024, Amazon has charged UK sellers 20% UK VAT on their Amazon UK selling fees, FBA fees and subscription, which a VAT-registered seller reclaims on the VAT return. Ads on Amazon's EU sites, such as Amazon.de, carry that country's VAT until Amazon has your UK VAT number, and are reverse charged after that. VAT charged by another country cannot be reclaimed on a UK VAT return.
The threshold counts the full price customers pay, before marketplace fees, FBA fees and advertising come off. Payouts are lower, so a seller who measures against payouts can pass £90,000 without noticing. Add up sales across every channel.
Yes, within limits. You can reclaim VAT on stock bought in the four years before registration if you still had it on your effective date, and on services bought in the previous six months. Claim it on your first VAT return and keep a stock record.
No. A business based outside the UK has no registration threshold and must register as soon as it makes a taxable sale in the UK. Marketplaces collect the VAT on many of its sales to UK consumers, but sales to VAT-registered businesses still need a UK VAT number.
Yes, when you charge the customer for delivery. Postage follows the VAT rate of the goods, so delivery on a standard-rated item carries 20% VAT. For zero-rated goods such as coffee beans, the postage is zero-rated too.
You owe VAT on every taxable sale from the date you should have been registered, even if you didn't charge it. If prices included no VAT, it comes out of your takings, which at 20% is one-sixth of each sale. HMRC can also charge a penalty based on how much is owed and how late you are.
That is the current plan. Marketplaces would collect VAT on your sales if you are VAT registered, or if you sell more than £90,000 a year on any one platform. Second-hand goods, personal sales and sales to other businesses would be excluded, and sales through your own website would not be affected. The change still needs legislation, so the details could change.
You can ask HMRC to cancel your registration if your taxable turnover falls below £88,000, and you must cancel within 30 days if you stop trading or stop making taxable sales. Most businesses cancel online, and HMRC usually confirms within 40 working days. On the cancellation date, you pay VAT on stock and assets you reclaimed VAT on, if that VAT comes to more than £1,000. Non-UK businesses cannot use the £88,000 test and stay registered while they sell in the UK.
A VAT-registered business must give a VAT invoice within 30 days when it sells to another VAT-registered business. A full invoice shows a unique number, the invoice date and time of supply, your name, address and VAT number, and the customer's name and address. Each line needs a description, quantity, unit price, VAT rate and amount before VAT, with the total VAT at the end. Sales to consumers don't need one, and a business buyer on a sale of £250 or less can be given a simpler invoice. Some invoices also need set wording, such as "reverse charge" or the name of a margin scheme for second-hand goods.
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