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Do I Need to Register for VAT as an Amazon or eBay Seller?

VAT as an Amazon or eBay seller is something every online business owner needs to understand early. If you sell on Amazon or eBay — whether as a side hustle or a full-time business — VAT registration is something you cannot afford to ignore. This article explains the VAT registration threshold, when you must register, what happens if you sell through overseas marketplaces, and what your obligations look like once you’re registered. It’s written for UK-based e-commerce sellers at every stage, from new starters to established online traders.

What is the VAT registration threshold?

In 2026/27, you must register for VAT once your taxable turnover exceeds £90,000 in any rolling 12-month period. This is not a calendar year figure — HMRC looks at any 12-month window, not just April to April.

The threshold applies to your total taxable turnover from all business activities combined. If you sell on Amazon, eBay, Etsy, and your own website, all of that income counts together. You cannot split it across platforms to stay under the limit.

Taxable turnover includes standard-rated sales (20% VAT), reduced-rated sales (5% VAT), and zero-rated sales (0% VAT). It does not include exempt sales, such as certain financial services or residential property. Most physical goods sold on Amazon or eBay are standard-rated, so your full sales figure will almost certainly count.

How your turnover is calculated for VAT purposes

This trips up a lot of online sellers. Your VAT turnover is based on your gross sales — the amount customers pay you — not your profit. Platform fees, postage, returns, and cost of goods do not reduce your turnover figure for VAT threshold purposes.

If you sell £100,000 of goods and your Amazon fees and postage costs come to £30,000, your taxable turnover for VAT is still £100,000. You crossed the threshold. The costs are relevant to your profit and your income tax bill, but not to when you must register for VAT.

HMRC expects you to monitor your rolling 12-month turnover at the end of every month. If at the end of any month your total sales over the previous 12 months exceed £90,000, you must register. You have 30 days from the end of that month to notify HMRC, and your effective registration date will be the first day of the following month.

Good bookkeeping is essential here. If you are not tracking monthly sales totals, you can miss the threshold and end up with a late registration penalty.

VAT as an Amazon or eBay seller: when must you register?

There are two triggers for compulsory VAT registration:

  • Historic test: Your taxable turnover in the past 12 months has gone over £90,000.
  • Future test: You have reasonable grounds to expect your taxable turnover to exceed £90,000 in the next 30 days alone. This could happen if you win a large contract or launch a major sales campaign.

If you hit the historic test, you must register within 30 days of the end of the month in which you exceeded the threshold. If you hit the future test, you must register immediately — your VAT registration takes effect from the start of that 30-day period.

Missing the registration deadline means HMRC can backdate your registration to when you should have registered. You will owe VAT on all sales made since that date, whether or not you collected it from customers. That can be a significant unexpected bill, particularly for sellers with tight margins.

Selling on multiple platforms

Many online sellers use Amazon and eBay alongside other channels — Etsy, Depop, their own Shopify store, or even market stalls. All taxable sales from all sources must be combined when calculating whether you have hit the VAT threshold.

There is no separate threshold per platform. HMRC is interested in your total business turnover. If you earn £50,000 on Amazon and £45,000 on eBay, you have £95,000 in taxable turnover and you must register for VAT.

This also applies if you run multiple sole trader activities. If you sell on eBay and also do some freelance work, all of that income is assessed together unless you have legally separated the activities into different businesses (such as a limited company for one activity and a sole trader business for another).

Overseas sellers and UK VAT rules

Since 2021, the rules for overseas sellers and online marketplaces changed significantly. If you are based outside the UK and sell goods to UK customers, you may have UK VAT obligations regardless of your turnover level.

Goods stored in the UK

If you are an overseas seller using Amazon’s Fulfilment by Amazon (FBA) service and your stock is stored in a UK warehouse, you must register for UK VAT from day one. There is no threshold for overseas sellers whose goods are already in the UK at the point of sale.

Goods sold under £135 sent from overseas

For goods worth £135 or less at the point of sale, the online marketplace (Amazon or eBay) is responsible for collecting and paying the VAT. The seller does not need to register for UK VAT for these sales alone, though you may still need to register depending on your wider circumstances.

Goods over £135 sent from overseas

If you sell goods worth more than £135 and ship them directly from outside the UK, VAT and import duties are handled differently. These rules can be complex, and if this applies to you, it is worth taking professional advice rather than guessing.

UK-based e-commerce sellers who use Amazon FBA with stock held in UK fulfilment centres should treat themselves the same as any other UK business — the £90,000 threshold applies.

Should you register voluntarily before the threshold?

You can register for VAT voluntarily at any point, even if your turnover is below £90,000. Whether this makes sense depends on your circumstances. Many sellers weighing up VAT as an Amazon or eBay seller find early registration pays off sooner than they expect.

Reasons to register early

  • You buy a lot of goods and materials on which you pay VAT. Registering lets you reclaim that input VAT.
  • Most of your customers are VAT-registered businesses. They can reclaim the VAT you charge, so your prices remain competitive.
  • You expect to cross the threshold soon. Registering now avoids a rushed registration later, which matters most for anyone new to VAT as an Amazon or eBay seller.
  • You have significant setup costs (stock, equipment, software) and want to reclaim the VAT on those purchases from day one.

Reasons to wait

  • Your customers are mostly consumers (non-VAT registered individuals). Adding 20% VAT to your prices either reduces your margin or makes you less competitive.
  • You are selling zero-rated goods. In that case, you may be able to reclaim input VAT without charging output VAT — but check with an accountant before proceeding.
  • The additional admin burden is not worth it at your current sales level.

Voluntary registration is not the right move for everyone, but it is worth reviewing annually as your business grows.

What happens after you register?

Once you are VAT registered, you must:

Getting VAT as an Amazon or eBay seller right at this stage sets the pattern for every return you file afterwards.

  • Charge VAT on your taxable sales at the correct rate (usually 20% for physical goods).
  • Issue VAT invoices to VAT-registered business customers when requested.
  • Submit VAT returns to HMRC, usually every quarter.
  • Pay any VAT owed to HMRC by the deadline (usually one month and seven days after the end of your VAT quarter).
  • Keep digital VAT records under Making Tax Digital rules.

You can also reclaim VAT you have paid on business purchases — stock, packaging, postage (where VAT applies), accountancy fees, software subscriptions, and so on. This is called input VAT, and it reduces the amount you pay to HMRC.

The Flat Rate Scheme

If your taxable turnover is £150,000 or below (excluding VAT), you may be eligible for the Flat Rate Scheme. Instead of calculating the exact VAT on every transaction, you pay a fixed percentage of your gross turnover to HMRC. The rate depends on your trade sector. For some online sellers this can be simpler and slightly more profitable, but for others it works out more expensive. It is worth running the numbers before applying.

Selling on Amazon after VAT registration

Amazon requires sellers who are VAT registered in the UK to upload their VAT number to Seller Central. Amazon may apply VAT to your fees differently once your number is on record. Keep your VAT details up to date on all platforms you sell through.

Making Tax Digital for VAT

All VAT-registered businesses must now follow Making Tax Digital rules. This means keeping digital VAT records and submitting VAT returns using compatible software. You cannot submit a VAT return by logging into your HMRC account and filling in a form manually.

Software like Xero, QuickBooks, or FreeAgent connects directly to HMRC and handles the submission for you. If you are not already using accounting software, VAT registration is the point at which you need to start. If you need help getting set up, Xero training can make the transition straightforward.

Keeping your records digitally also makes it far easier to track your rolling 12-month turnover, manage your cash flow, and prepare for any HMRC enquiries.

Getting this right from the start

VAT registration is not optional once you cross the £90,000 threshold — and HMRC has access to data from Amazon, eBay, and other platforms. Since 2023, UK digital marketplaces have been required to report seller income data to HMRC. If you are trading above the threshold without being registered, there is a real risk HMRC will find out and raise an assessment with penalties. Getting VAT as an Amazon or eBay seller right from day one avoids that risk entirely. For official guidance, see HMRC’s guidance on VAT registration thresholds.

Understanding VAT as an Amazon or eBay seller starts with good habits. Track your monthly sales totals. Know your rolling 12-month figure. If you are approaching £90,000, speak to an accountant before you hit the threshold rather than after. Late registration is avoidable, and the penalties are not small.

If you are already registered and finding the quarterly returns time-consuming, getting professional help with your VAT returns frees you up to focus on growing your sales. And if you need to sort out your wider tax position — income tax, self assessment, or corporation tax if you trade through a limited company — it makes sense to deal with everything together.

Frequently asked questions

These are the questions we hear most often about VAT as an Amazon or eBay seller.

Do I have to register for VAT if I only sell on eBay as a hobby?

If you are selling personal items occasionally — clearing out old belongings, for example — that is generally not considered a business activity and VAT does not apply. However, if you are buying goods to resell, making regular sales, or operating with a view to profit, HMRC will treat that as trading. Once your taxable turnover from trading exceeds £90,000 in any rolling 12-month period, you must register for VAT.

Does Amazon collect VAT on my behalf?

For certain transactions — particularly goods under £135 sold by overseas sellers — Amazon acts as the deemed supplier and accounts for VAT itself. However, if you are a UK-based seller or an overseas seller with stock in UK warehouses, Amazon does not collect or remit VAT on your behalf. You are responsible for charging, collecting, and paying the VAT yourself.

What happens if I go over the VAT threshold but then my sales drop?

Once registered, you can apply to deregister only if your taxable turnover falls below check the latest HMRC guidance for current figures. You cannot simply ignore your registration because sales have dropped temporarily. You must formally apply to HMRC to cancel your registration.

Can I use the VAT Flat Rate Scheme as an Amazon seller?

Yes, if your taxable turnover is £150,000 or below (excluding VAT) you can apply to use the Flat Rate Scheme. The rate you use depends on your business type. Some online retail categories have a flat rate of around 7.5%, but check the latest HMRC guidance for current figures for the rate that applies to your specific trade sector.

Do I need to include Amazon fees in my VAT return?

Amazon charges fees for selling, fulfilment, and advertising. If Amazon is UK VAT-registered, you may be able to reclaim the VAT on those fees as input VAT on your VAT return. Amazon should provide a VAT invoice or report through Seller Central. Keep those records as they reduce your VAT bill.

I sell on both Amazon and eBay. Do the sales from each platform have separate VAT thresholds?

No. There is one VAT threshold for your entire business. All taxable sales across every platform and every channel you use are added together. If your combined Amazon and eBay sales exceed £90,000 in any rolling 12-month period, you must register — regardless of how the income is split between platforms.

Areas we cover

NDCA works with clients across the following regions. If you’re based in one of these areas, our team can help with the accounting issues covered in this article.