UK Budget 2026: What It Means for Online Sellers

In brief: the UK Budget 2026 for online sellers, delivered on 28 October 2026, keeps the main rates of income tax, VAT and National Insurance unchanged. Marketplaces are set to collect VAT on UK sellers' sales from October 2027, the Trading Allowance is due to rise to £3,000 on 6 April 2027, and the £135 customs relief on low-value imports is due to end by October 2028. VAT e-invoicing would follow in April 2029. Amazon hasn't yet announced how it will handle the marketplace change.

Budget 2026 changes for online sellers, by start date

Changes in early 2027

Change	Starts	Who it affects
Main rate first-year allowance up from 40% to 50%	Spending from 1 January 2027	Businesses buying equipment
Main rate writing-down allowance cut to 12%	April 2027	Businesses with a main pool
Trading Allowance and Self Assessment reporting threshold up from £1,000 to £3,000	6 April 2027	Individuals with small trading income
No late submission penalty points on quarterly updates for 2027-28	6 April 2027	Sole traders who must join Making Tax Digital that April
Reverse charge on overseas services limited to VAT-registered buyers	April 2027	Unregistered businesses paying overseas suppliers

Changes from October 2027

Change	Starts	Who it affects
Marketplaces to collect VAT on UK sellers' sales	October 2027	VAT-registered UK sellers, and others over £90,000 on one platform
£135 customs duty relief removed	By October 2028	Sellers importing low-value parcels
VAT invoices in a set electronic format	April 2029	VAT-registered businesses
Direct Debit needed for VAT return liabilities	April 2029	VAT-registered businesses, with some exceptions

Corporation Tax stays at 25%, and 19% for small profits, from 1 April 2028.

Marketplace VAT is the largest change for Amazon sellers

Marketplaces would account for the VAT on sales by every VAT-registered UK business. Unregistered businesses join once their yearly sales on one platform exceed £90,000. Personal sales, second-hand goods and business-to-business sales are left out, and 2027 regulations will fix the details. Our marketplace VAT article covers scope and cash flow.

The £3,000 Trading Allowance is measured on gross sales

From 6 April 2027, individuals whose gross trading income is £3,000 or less generally won't need to report it to HMRC. Gross means income before expenses. Amazon pays out after taking its fees, so the payout figure isn't the one to test.

A worked example

Illustrative figures for 2027-28. A part-time seller receives £2,300 in payouts, after Amazon deducted £1,200 in fees.

• Gross sales: £2,300 + £1,200 = £3,500, which is over £3,000, so the income has to be reported.
• Actual costs: £1,200 of fees + £900 of stock = £2,100, leaving a profit of £3,500 − £2,100 = £1,400.
• Allowance instead of costs: if partial relief works as it does today, £3,500 − £3,000 = £500.

What the Budget could mean for your bookkeeping

• Keep gross figures, not just payouts. The Trading Allowance test and Making Tax Digital quarterly updates both need your sales figure, so split each payout into sales, refunds and fees. Sole traders with qualifying income over £30,000 in 2025-26 join Making Tax Digital for Income Tax on 6 April 2027.
• Date equipment purchases. New shelving, label printers or computers bought from 1 January 2027 could qualify for the higher first-year allowance. Record them as assets with date and cost, and agree with your accountant which allowance to claim.
• Separate duty from import VAT. Once the £135 relief goes, customs duty on small imports becomes part of your stock cost. Post it to its own account, apart from import VAT.
• Overseas software and services. If you aren't VAT-registered, overseas suppliers would charge UK VAT from April 2027. That VAT is a cost for you.
• Invoices in a new format. The government plans to publish the full e-invoicing design by April 2028. Amazon hasn't said what it means for its fee invoices or VAT invoices.

Do you need to do anything?

Not yet. Look out for the Finance Bill 2026-27, HMRC's guidance, the 2027 regulations and any notice from Amazon. Ask your accountant whether the Trading Allowance, the new first-year allowance or monthly VAT returns would suit your business. The FBA bookkeeping guide explains the records HMRC expects today.

How TrueBooks helps

TrueBooks imports each Amazon settlement and posts sales, refunds and every fee type to their own Xero accounts with the correct UK VAT. You get the gross figures, and each settlement still matches the bank deposit. See how each payout posts to Xero.