Pricing & finance · 2026

Pricing & finance

How VAT works on marketplace sales in the UK (Amazon, eBay, Temu, TikTok Shop) — 2026 guide

Plain English on how VAT flows through UK marketplace sales in 2026. Covers registration thresholds, OMP deemed-supplier rules, and what you can reclaim on fees.

11 min readIntermediateUpdated 15 April 2026

TL;DR

UK VAT registration is compulsory once taxable turnover exceeds £90,000 in any rolling 12-month period (current 2026 threshold).
Under UK OMP (Online Marketplace) rules, Amazon, eBay, Temu and TikTok Shop are 'deemed suppliers' for certain B2C sales — they collect and remit VAT directly to HMRC for these.
Most UK-to-UK sales from UK-established sellers are NOT deemed-supplier — you collect and account for VAT as normal.
You can reclaim the input VAT on marketplace fees (20% of the fee) once VAT-registered.
If you're unsure which scenario applies to a sale, check the 'VAT on receipt' column in the marketplace's seller report — it's usually explicit.

Why this matters

VAT on marketplace sales is the most confusing area of UK ecommerce because the rules depend on three things simultaneously: where you're established, where the stock is when sold, and whether the buyer is UK-based. Post-Brexit OMP rules added another layer — marketplaces are now 'deemed suppliers' in specific scenarios, which changes who owes VAT to HMRC.

Goal of this playbook

By the end of this guide you'll understand the four VAT scenarios that cover 99% of UK marketplace sales, and how to configure your inventory platform to record them correctly. We strongly recommend discussing your specific circumstances with a VAT-qualified accountant — this playbook is educational, not tax advice.

Before you start

You’ll need:

A UK sole trader or limited company
Either VAT-registered or approaching the £90,000 threshold
Sales records from your marketplaces for at least the last 12 months

The playbook

Know your VAT status and threshold

15 min

The 2026 UK VAT registration threshold is £90,000 of taxable turnover in a rolling 12-month period (increased from £85,000 in April 2024). 'Rolling 12 months' is crucial — it's not tax-year-aligned. Check every month: did your last 12 months exceed £90,000? If yes, you must register within 30 days of the end of the month you crossed the threshold.

Taxable turnover includes standard-rated and zero-rated sales, but excludes exempt sales.
You can voluntarily register below the threshold — worth considering if most of your customers are VAT-registered businesses.

Pitfall

Missing the 30-day registration deadline can result in penalties plus back-dated VAT. The marketplaces' sales reports are HMRC-admissible evidence of when you crossed the threshold.

Understand the four common VAT scenarios

30 min

Scenario A — UK-established seller, stock in UK, UK customer: you're the supplier. Charge 20% VAT (standard rate) on top of the sale price. You remit it to HMRC yourself. Scenario B — UK-established seller, stock overseas, UK customer under £135 item value: the marketplace is the deemed supplier. Scenario C — Overseas seller (outside UK), stock in UK, UK customer: the marketplace is the deemed supplier for the B2C portion. Scenario D — UK seller exporting to EU customers: zero-rated export (keep proof of export for 6 years).

'Established' means your business is based in the UK (registered address, trading from here).
Scenario A is the most common — assume this unless you have reason otherwise.

Configure your inventory platform to record VAT correctly per order

30 min

MaxInvent records VAT per order based on the channel's OMP flag. Each order has a 'VAT treatment' field: 'seller-collected' (you account for VAT) or 'marketplace-collected' (deemed-supplier — no action). Amazon, eBay, Temu and TikTok Shop all send this flag in their order payload.

If you see orders marked as 'marketplace-collected', do NOT add them to your own VAT return as output tax — they're already accounted for by the marketplace.
Marketplace-collected VAT is typically 0.5-3% of total marketplace volume for UK-established sellers.

Set up VAT codes on every product

1-2 hours for typical catalogue

Most products are standard-rated (20% VAT). But several categories are zero-rated (0%), including most food, children's clothing, and books. Others are reduced-rate (5%), including domestic fuel. Tag every SKU with its correct rate. MaxInvent auto-applies rates by HMRC commodity code where possible.

Pitfall

Mis-tagging can cost you money (paying VAT you don't owe) or trigger HMRC enquiry (under-paying). Children's clothing under size guidance (typically under age 14 / specific size thresholds) is zero-rated. Adult-size in children's themes is standard-rated. Check every case.

Reclaim input VAT on marketplace fees

15 min per quarter

Amazon, eBay and other marketplaces charge VAT on their fees (20% for UK-established sellers). This is input VAT that you can reclaim via your VAT return. Download the monthly VAT invoice from each marketplace's seller central, sum the VAT amount, and include as input tax in your next return.

eBay provides downloadable VAT invoices in Seller Hub → Reports.
Amazon UK provides them in Seller Central → Reports → Tax document library.
Temu and TikTok Shop provide VAT invoices via the settings area; TikTok Shop also supports automated VAT invoice download in the UK.

File VAT returns on time (Making Tax Digital compliant)

30-60 min per quarter

VAT returns are quarterly for most small businesses. Under Making Tax Digital, you must file via compatible software — Xero, QuickBooks, FreeAgent all work. Link your inventory platform to your accounting software so sales and fees flow automatically. MaxInvent supports Xero sync out of the box.

How to know it worked

After following every step, you should be able to verify these outcomes:

VAT is registered (HMRC certificate in hand) if over £90k turnover, or 30 days before crossing the threshold
Every product has a correct VAT rate tag (0%, 5%, or 20%)
Every order has a VAT treatment flag (seller-collected or marketplace-collected)
Quarterly VAT returns are filed on time via MTD-compatible software
Input VAT on marketplace fees is reclaimed each quarter

Frequently asked questions

When does Amazon UK collect VAT on my behalf?+

Amazon is the 'deemed supplier' for B2C sales where either (a) the seller is not UK-established, or (b) the seller is UK-established but stock is shipped from outside the UK and item value is under £135. For most UK-based sellers with UK stock, Amazon is NOT the deemed supplier — you collect and remit VAT yourself. Check the VAT On Receipts column in your Amazon transaction report — it's explicit.

Do I need to be VAT registered to sell on Amazon UK?+

No, not until your taxable turnover exceeds £90,000 in a rolling 12-month period. Below that, you can trade without VAT registration. Amazon may still deduct VAT on your fees (they charge you VAT on Amazon services) but you won't be able to reclaim it.

Can I reclaim VAT on FBA fees?+

Yes, if you're VAT-registered. FBA fulfilment fees are subject to 20% VAT for UK-established sellers. Amazon provides monthly VAT invoices in Seller Central that include FBA fee breakdowns. Reclaim as input tax in your next VAT return.

What about Temu VAT for UK sellers?+

Temu acts as the deemed supplier for most sales where the seller is outside the UK OR where items ship from outside the UK. UK-established sellers shipping UK-stocked goods to UK buyers are typically the supplier themselves — Temu passes through the order and you account for VAT. Temu provides UK VAT invoices in Seller Central settings.

Is this playbook tax advice?+

No. This is educational content summarising public HMRC guidance and marketplace documentation as of 2026. VAT treatment depends on your specific circumstances. Always confirm with a qualified VAT-registered accountant or ATT-qualified adviser before relying on any of this for your return.

Ready to run this playbook in MaxInvent?

MaxInvent is built for UK multi-channel sellers. One stock pool across Amazon, eBay, Temu, TikTok Shop, Groupon and more — with the UK’s only native Temu courier label integration.

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Playbooks are educational content. For tax, legal or regulatory questions (especially around VAT), always consult a qualified adviser.