VAT for Etsy, eBay and Amazon Sellers

Do Online Sellers Need to Register for VAT?

The same VAT registration threshold applies to online sellers as any other business. If your total VAT taxable turnover exceeds £90,000 in a rolling 12-month period, you must register for VAT.

Your VAT taxable turnover includes all sales across all platforms — Etsy, eBay, Amazon, your own website, craft fairs, and any other channel combined. You don't get a separate threshold for each platform.

How Marketplaces Affect VAT

Marketplace Facilitation Rules

Since January 2021, online marketplaces like Amazon, eBay, and Etsy are required to collect and remit VAT on certain sales:

• Goods imported into the UK valued at £135 or less: The marketplace collects VAT at the point of sale
• Goods sold by overseas sellers to UK consumers: The marketplace is responsible for VAT

If you're a UK-based seller, these marketplace facilitation rules generally don't change your VAT obligations. You're still responsible for registering and accounting for VAT if your turnover exceeds the threshold.

Platform Fees and VAT

The fees charged by marketplaces (listing fees, commission, advertising) are subject to VAT. If you're VAT-registered, you can reclaim the VAT on these fees. Make sure you download VAT invoices from each platform — they're usually available in your seller account settings.

Specific Platform Considerations

Amazon

• Amazon provides VAT invoices for their seller fees
• FBA (Fulfilment by Amazon) fees attract VAT
• Amazon's VAT Calculation Service can calculate and display VAT on your product listings
• If you store goods in other EU countries through FBA, you may have VAT registration obligations in those countries

eBay

• eBay charges VAT on its seller fees
• Managed Payments fees include VAT
• eBay provides monthly VAT invoices downloadable from your seller hub

Etsy

• Etsy charges VAT on transaction fees, listing fees, and advertising fees
• Etsy provides VAT invoices through your payment account
• For UK sellers, Etsy collects VAT on behalf of overseas buyers on orders under £135

Common Issues for Online Sellers

Mixed Supplies

If you sell a mix of standard-rated and zero-rated items (e.g., children's clothing which is zero-rated alongside adult clothing which is standard-rated), you need to apply the correct VAT rate to each product.

Second-Hand Goods

If you sell second-hand goods, the VAT Margin Scheme may apply. Under this scheme, you only pay VAT on the profit margin (selling price minus purchase price), not the full selling price. This is particularly relevant for eBay sellers dealing in used items.

Hobby vs Business

If you're selling items occasionally as a hobby, you're not trading and VAT doesn't apply. But if your selling activity is regular, organised, and profit-seeking, HMRC will treat it as a business. There's no exact line — it's a question of scale, frequency, and intent.

Record-Keeping

Keep detailed records of all sales across all platforms, including:

• Sales amounts and VAT charged
• Platform fee invoices
• Shipping costs and VAT
• Purchase invoices for stock

With Accounted, you can connect your bank account and Penny will automatically categorise marketplace deposits, fees, and refunds — keeping your records MTD-compliant.

Sell online with confidence. Start your free trial with Accounted and keep your VAT obligations sorted.