UK marketplaces will collect VAT on UK sellers' sales from October 2027

The UK government confirmed in the Autumn Budget 2026 that, from October 2027, online marketplaces will be responsible for collecting and accounting for VAT on qualifying sales that UK businesses make through them. The measure extends the existing marketplace liability rules. VAT-registered UK businesses are in scope; a UK business that is not VAT-registered enters scope once its annual sales on a single marketplace pass £90,000. The precise start date will be set in secondary legislation due in 2027.

The numbers, and the caveat

Three details decide who is affected. The £90,000 threshold is per marketplace, not per business: it applies separately to each platform, so sales spread across two marketplaces do not add up to it. Personal sales, second-hand goods and business-to-business transactions are out of scope. And the measure changes who collects the tax, not the rate.

HMRC estimates that non-compliance on marketplace sales costs the exchequer "hundreds of millions of pounds annually" (Pinsent Masons).

The caveat is that the mechanics are not settled. The precise commencement date and the operational detail come in secondary legislation due in 2027, so sellers should plan on the framework, not the final rules.

Why this matters

For a VAT-registered seller, VAT that used to sit in the settlement between the sale and your return will be collected by the marketplace instead, so payouts arrive net sooner. That is a working-capital change, not a new tax — and it lands on sellers who were already compliant. For sellers below the VAT threshold, the per-platform test is what decides whether a marketplace starts collecting on your behalf.

This week

1. Pull UK domestic B2C sales by marketplace, legal entity, VAT status, product tax rate and fulfilment location, and check whether any single platform passes £90,000.
2. Ask each marketplace when it will publish settlement schemas, invoice rules, return adjustments and seller-verification requirements.
3. Re-run your cash forecast with marketplace-collected VAT removed from available settlement cash.

When a Budget rewrites marketplace rules, your own storefront stays yours

From October 2027, UK marketplaces will collect and account for VAT on qualifying sales by UK businesses — a reminder that the terms of a marketplace sale are set by someone else and can move with a Budget. A vcity online store gives your catalogue a home you control: SEO-ready product pages, your own payment methods and orders managed in one place, so the buyer relationship stays with you. Keep selling where your customers already are; just don't let the only copy of your catalogue live somewhere you cannot see the next rule change coming.

See vcity plans

Sources

• Deloitte Taxscape — Extending VAT online marketplace liability to combat non-compliance (analysis of the Budget 2026 measure — "takes effect from October 2027", £90,000 per-platform threshold, exclusions; opened 1 Nov 2026)
• Pinsent Masons OUT-LAW — UK Budget 2026: VAT reforms to increase burden on online marketplaces (coverage — October 2027 start, £90,000 threshold per platform, exclusions, HMRC "hundreds of millions" estimate; opened 1 Nov 2026)
• ICAEW — Budget: nine key VAT changes announced (coverage — £90,000 per-marketplace threshold, from search snippet only; page not fully readable)
• GOV.UK — Extending VAT online marketplace liability (primary — pending human click: not opened by the tool)