VAT for Online Sellers in the UK: A Plain-English Guide (2026)
By Saurabh Pandey · Updated · 3 min read
On this page
VAT is one of the most confusing parts of selling online in the UK. This plain-English guide to VAT for online sellers in the UK covers when you must register, how marketplaces handle VAT, what happens to VAT on Etsy and eBay fees, and the basics of selling to the EU.
When do you have to register for VAT?
You must register for VAT when your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect it to go over £90,000 in the next 30 days alone. You can deregister if turnover falls below £88,000.
Turnover means your total sales, not profit. A reseller with £95,000 of sales and £20,000 of profit must still register.
You can also register voluntarily below the threshold. That lets you reclaim VAT on business costs, but you must then charge VAT on your sales, which raises prices for non-business customers.
UK VAT rates
| Rate | % | Examples |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Some energy-saving products, children's car seats |
| Zero | 0% | Most food, books, children's clothes |
Most products sold online are standard-rated at 20%. Check GOV.UK for your specific products.
How to add or remove 20% VAT
- Add VAT: net price × 1.2. £50 becomes £60.
- Remove VAT: gross price ÷ 1.2. £60 becomes £50, so the VAT is £10.
Never take 20% off a VAT-inclusive price: £60 × 0.8 = £48, which is wrong. The calculator does it correctly:
VAT Calculator (UK)
Open full calculatorFee breakdown
Enter an amount.
More examples are in our guide on how to add or remove VAT.
Pricing once you are VAT-registered
Once registered, one-sixth of every VAT-inclusive price you charge UK consumers belongs to HMRC. If you sell a £24 item and don't raise the price, you now keep only £20 of it. Many sellers who register raise prices or review their margins at the same time. Use the profit margin calculator to see the effect.
How marketplaces handle VAT
Online marketplaces such as Amazon, eBay and Etsy are responsible for VAT in two main situations:
- Goods worth £135 or less imported from outside the UK and sold to UK consumers.
- Goods already in the UK sold by overseas sellers to UK consumers.
In these cases the marketplace charges and pays the VAT. UK-based sellers selling their own UK stock usually remain responsible for their own VAT once they are registered.
VAT on platform fees
Etsy, eBay, Amazon and other platforms add 20% VAT to the fees they charge UK sellers. If you are VAT-registered, you can usually reclaim this VAT, or the platform stops charging it once you add your VAT number. If you are not registered, it is a real cost. On Etsy, VAT on fees can add around 2–3% of each order; see Etsy fees in the UK.
The Flat Rate Scheme
Small businesses with taxable turnover up to £150,000 (excluding VAT) can join the Flat Rate Scheme. You charge customers 20% VAT as normal, but pay HMRC a fixed percentage of your VAT-inclusive turnover, which depends on your business sector. You can't usually reclaim VAT on purchases. Businesses that spend very little on goods may be classed as "limited cost traders" and pay a higher flat rate. Check whether the scheme saves you money before you join.
Selling to the EU
Since 2021, VAT on goods sold to EU consumers is due in the buyer's country:
- Orders up to €150 via marketplaces: Etsy, eBay and Amazon usually collect EU VAT from the buyer under the Import One-Stop Shop (IOSS), so the parcel shouldn't face VAT on arrival.
- Orders through your own website: you may need to register for IOSS (through an intermediary) or the buyer pays VAT and handling fees on import, which can lead to refused parcels.
- Orders over €150: import VAT and possibly duty are charged on arrival.
VAT records and Making Tax Digital
VAT-registered businesses must keep digital records and file VAT returns using software that works with Making Tax Digital. Keep platform statements, which show fees and the VAT on them, along with receipts for business purchases.
The bottom line
Track your rolling 12-month turnover against the £90,000 threshold, price with VAT in mind before you reach it, and keep good records. For specific advice, speak to an accountant or check GOV.UK.
Thresholds and rules in this guide were checked against GOV.UK in October 2026. This is general information, not tax advice.
Frequently asked questions
What is the VAT threshold for online sellers in the UK?
£90,000 of VAT-taxable turnover in a rolling 12-month period. You must register if you go over it, or expect to within the next 30 days.
Do I pay VAT on eBay or Etsy sales if I'm not registered?
You don't charge VAT on your sales, but you pay 20% VAT on the platform's fees and can't reclaim it.
Do marketplaces pay VAT for me?
Marketplaces handle VAT on imported goods worth £135 or less and on sales by overseas sellers. UK sellers selling UK stock are usually responsible for their own VAT once registered.
How do I remove VAT from a price?
Divide the VAT-inclusive price by 1.2 for 20% VAT. £120 ÷ 1.2 = £100, so the VAT is £20.