UK Online Marketplace VAT Proposal 2027

HMRC and HM Treasury have consulted on extending online marketplace VAT liability to sales made by UK businesses through online platforms. Under the proposal, a marketplace could become responsible for accounting for VAT on certain sales it facilitates, rather than leaving the platform seller to account for the VAT alone.

This is a policy proposal, not a new VAT rule that every UK seller must apply today. The consultation closed on 18 August 2026, and the government said in September that it was still analysing responses and would set out next steps later. No final start date, minimum platform threshold, rate relief or full set of exclusions has been published in the material used for this guide.

If you sell goods through a platform, continue to check your current VAT position with the VAT registration guide and use the VAT Calculator→ for current-law estimates. Do not change invoices or assume a marketplace will collect VAT until HMRC publishes final rules and platform instructions.

What is online marketplace VAT liability?

VAT liability normally sits with the business making a taxable sale. The 2026 consultation asks whether that responsibility should be shifted, for specified marketplace transactions, to the online marketplace that facilitates the sale. The policy is intended to address VAT non-compliance by UK businesses selling through platforms and to reduce the competitive disadvantage for businesses that comply with VAT rules.

The proposal builds on earlier online marketplace measures that made platforms liable for VAT on certain sales by overseas businesses. The new consultation focuses on extending the approach to UK businesses and domestic sales of goods, including examples such as retail goods and restaurant or takeaway food sold through platforms.

Who may be affected?

The proposed extension is aimed at UK businesses selling goods through online marketplaces where the goods are in the UK at the point of sale. It may matter to retailers, food businesses, resellers and other traders whose platform takes payment, sets terms or facilitates delivery.

The consultation also recognises that the policy should not unintentionally pull ordinary private sellers into a business VAT system. Sales by people who are not in business, including individuals selling second-hand goods, are described as outside the intended scope. The final definition of a business and the treatment of second-hand goods still need to be checked against the eventual rules.

Businesses below the VAT registration threshold are an important design issue. The government consulted on ways to protect smaller sellers, including a minimum platform threshold or a VAT rate relief for UK businesses below the registration threshold. These are options for consultation, not entitlements that a seller can claim now.

Does this change the £90,000 VAT threshold?

Not on the basis of the consultation alone. The current VAT registration rules require registration when taxable turnover exceeds £90,000 in the previous 12 months or is expected to exceed £90,000 in the next 30 days, subject to the detailed rules and exceptions. Voluntary registration remains possible below the threshold.

The marketplace proposal asks who should account for VAT on an in-scope platform sale. That is a different question from whether a business must register under the ordinary VAT turnover test. Until final legislation explains the interaction, do not treat marketplace deductions, platform fees or a proposed minimum platform threshold as a replacement for calculating taxable turnover.

What could change for a seller?

If the proposal becomes law, a marketplace may need to calculate and account for VAT on specified sales. The seller could see changes to the amount paid out, the VAT information shown in the platform statement, invoice or receipt handling, and the records needed to reconcile sales with the business accounts.

That does not automatically mean every sale becomes subject to a 20% charge or that every platform will use the same workflow. The final policy would need to explain the supplies in scope, rate treatment, returns, credits, refunds, cancellations, mixed transactions and the treatment of businesses below the registration threshold.

Keep a record of:

• the gross customer amount and the platform's commission;
• the product, VAT category and place of supply;
• the platform statement and payment date;
• refunds, cancellations and returned goods;
• your own taxable turnover outside the platform.

These records are useful under current VAT rules and will help if platform reporting changes later.

What about private selling and second-hand goods?

Selling unwanted personal possessions is not automatically a business activity. The consultation specifically says sales made by people who are not in business, including individuals selling second-hand goods, are not intended to be in scope of the proposed rules.

The position can be different for a person who buys or makes goods for resale, sells regularly with a profit motive, or otherwise operates a business. The label used on the platform does not decide the tax result. Keep evidence of the activity and check the ordinary trading, income-tax and VAT tests if the selling becomes organised or commercial.

The consultation also asks how second-hand goods sold by UK businesses should be treated. That is an open policy question, not a reason to assume that all used goods are excluded.

What is confirmed and what is still open?

Confirmed in the consultation record

• The government is considering extending online marketplace liability to UK businesses.
• The policy is aimed at sales facilitated by marketplaces where goods are in the UK at the point of sale.
• The consultation closed on 18 August 2026.
• The government is analysing responses and has not yet published the final design.
• Private sales by people who are not in business are not intended to be in scope of the proposal.

Not final

• The commencement date and any transition period.
• The minimum platform threshold, if one is adopted.
• Any VAT rate relief for businesses below the registration threshold.
• The treatment of second-hand goods sold by UK businesses.
• The exact platform reporting, invoice and correction process.

Practical preparation for marketplace sellers

There is no need to change a compliant seller's VAT process solely because the consultation has been published. The useful preparation is clean sales data and a clear distinction between private sales, trading activity and VAT-registered business sales.

Frequently Asked Questions

Evidence and decision checks

A reliable online marketplace vat liability 2027 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable online marketplace vat liability 2027 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Keep platform statements, refunds and import records available for the same reporting period.

Preserve the platform export and the field mapping used for the VAT return.

A transaction-level marketplace VAT file

Export seller, buyer location, goods, price, VAT treatment, marketplace role, refunds, returns and payment date. Do not use the gross payout as turnover. A platform may collect VAT in some cases while the seller remains responsible in others, so classify domestic sales, imports, low-value consignments, stock in another country and digital services separately.

Reconcile marketplace statements to bank receipts, credit notes, import VAT and the VAT return. Preserve the field mapping when the platform changes its report. Registration, distance-selling and platform-reporting duties are related but not interchangeable; keep the official guidance used for each conclusion.

Marketplace VAT evidence

Keep a transaction-level export showing seller, buyer location, goods, price, VAT treatment, marketplace role, refund, return and payment date. Do not rely on the platform's gross payout as turnover. A marketplace may collect VAT in some cases, while the seller remains responsible in others; the place of supply and the seller's status must be established for each pattern.

Review imports, low-value consignments, stock held in another country, fulfilment warehouses, digital services and private-to-business sales separately. Keep import VAT and customs records with the VAT return. If the platform changes its terms or reporting format, preserve the old export and document the mapping to the new fields.

Reconcile the VAT return to marketplace statements, bank receipts and credit notes. If an error is found, correct it through the current HMRC process and keep the calculation. VAT registration, distance-selling and platform-reporting duties are related but not interchangeable.

This guide reflects HMRC and HM Treasury material available on 19 September 2026. The consultation response, legislation and platform implementation guidance should be checked again before relying on a future marketplace VAT treatment.

Official sources

• HM Treasury: extending online marketplace liability factsheet
• HM Treasury: consultation on online marketplace VAT liability
• UK Parliament: written question on online marketplace VAT liability
• GOV.UK: selling goods through online marketplaces
• GOV.UK: register for VAT

These GOV.UK, HM Treasury, HMRC and Parliament sources are the official references for the consultation, proposed liability framework, existing VAT registration rules and implementation status discussed in this guide.