HMRC Consults on Marketplace VAT for UK-Based Sellers

In brief: the HMRC marketplace VAT consultation, which ran from 23 June to 18 August 2026, asked whether online marketplaces such as Amazon should account for the VAT on sales made by UK-based businesses to UK consumers, where the goods are already in the UK. Since 2021 that rule has only covered overseas sellers. It is a proposal: HMRC is now analysing responses, and no decision or start date has been announced.

What the HMRC marketplace VAT consultation proposes

	Today	Under the proposal
Who accounts for VAT on your UK sales to consumers	You, on your VAT return	The marketplace, on its own return
Your sale, for VAT purposes	A standard-rated sale to the customer	A deemed zero-rated sale to the marketplace
VAT on Amazon's fees and your purchases	Reclaimed by you	Still reclaimed by you
Sales to other businesses	Your VAT	Not covered — the proposal is for sales to consumers

The consultation also says VAT rates and the liability of goods would not change, so a zero-rated product stays zero-rated. People selling their own unwanted items are outside it, and HMRC floated leaving second-hand goods sold by businesses outside too, so the margin scheme keeps working. Takeaway food platforms are in scope as well as retail goods.

Sellers who aren't VAT-registered

HMRC put forward two options to protect smaller sellers. The lead option is a minimum platform threshold: the marketplace would only be liable where a UK business's sales on that platform exceed a set level, proposed at £90,000 to match the VAT registration threshold, with a lower figure also asked about. The alternative is a VAT rate relief for businesses under the registration threshold. Which option, if either, goes ahead will shape whether Amazon adds VAT to unregistered sellers' prices.

A worked example

A VAT-registered seller takes £30,000 a month from UK customers, all standard-rated, and pays £6,000 a month in Amazon fees including VAT. Ignoring VAT on stock purchases:

• Today: output VAT is £30,000 ÷ 6 = £5,000 a month, or £15,000 a quarter. Fee VAT to reclaim is £1,000 a month, £3,000 a quarter. The return shows £12,000 to pay.
• Under the proposal: Amazon keeps the £15,000 and pays it to HMRC. You still reclaim the £3,000, so the same return shows a £3,000 repayment.

Your quarterly payouts would fall by £15,000, and your VAT bill would fall by the same amount. You would no longer hold that VAT between payout and the return's due date.

What it could mean for your bookkeeping

• Different tax codes on sales. Sales that Amazon accounts for would no longer be standard-rated sales on your return. How HMRC wants the deemed zero-rated supply reported in each box would be set out in the final rules — check before your first return under them. Our guide to Amazon VAT return boxes shows how the boxes work today.
• New lines in settlements. For overseas sellers, Amazon already shows the VAT it collects and then withholds on each order. If the rule is extended, expect something similar on your own orders; the marketplace facilitator VAT guide explains how those lines are recorded today.
• More repayment returns. With most sales zero-rated, many sellers could find the VAT on fees and stock exceeds their output VAT. Keep reclaiming the VAT on Amazon seller fees, and expect HMRC to check repayment claims.
• Cash planning. Losing the VAT float matters most in months with big stock purchases. Ask your accountant whether monthly returns would suit you if you move into repayment.

Do you need to do anything?

Nothing yet. Watch for HMRC's formal response. If the government goes ahead, HMRC will publish draft legislation for a technical consultation first, and you would expect Amazon to announce how it will apply the change before it reaches your settlements.

How TrueBooks helps

TrueBooks already spots Marketplace Facilitator VAT orders in your Amazon settlements and posts them to Xero with the right treatment, alongside each fee and its reclaimable UK VAT. See how settlements post to Xero.