If you sell through Amazon, eBay or Temu and your turnover passes £90,000 a year, the chancellor is reportedly planning to take the VAT decision out of your hands entirely at this month's Budget — and for a seller already doing things properly, that is better news than the word "crackdown" suggests. According to the Times, covered on 14 October 2026 by both the Guardian and City A.M., John Healey is preparing to make online marketplaces legally responsible for collecting VAT at source from any seller on their platform turning over more than £90,000 a year, rather than trusting each seller to charge and remit it themselves.
The £90,000 figure is worth sitting with, because it is not a new number invented for this policy. It is the existing VAT registration threshold, the same one that has applied since April 2024. Nothing changes about who owes VAT or how much. What changes is who physically moves the money: instead of a seller banking the full sale price and setting VAT aside to pay over on a quarterly return, the marketplace would deduct it before the seller ever sees the payout. The stated target, per the reports, is foreign retailers running UK shell companies specifically to dodge VAT enforcement — not the UK small businesses already charging it correctly.
What's actually being proposed
The mechanism reported is specific: online marketplaces would become responsible for collecting VAT at source for every seller on their platform with annual revenue over £90,000. The Treasury is said to expect this to raise up to £1bn. Amazon itself, in a statement to the Times, put the figure lower, at around £700m — a gap of roughly 30% between the government's number and the platform's own estimate, which is usually a sign a threshold or scope gets tightened before it is finalised rather than loosened. Dan Neidle, founder of Tax Policy Associates, told the Times the plan was "a step in the right direction" but that the Treasury "needs to go further and make online marketplaces responsible for collecting every penny of VAT on the sales made on their platform," warning that otherwise "these Chinese sham companies will find just another way around the rules."
Amazon's own spokesperson took a notably supportive line, telling the Times that "closing this loophole will raise significant revenue for the exchequer and simplify compliance for both HMRC and legitimate sellers" — which lines up with what this means in practice for compliant UK sellers: a competitor who currently undercuts you by not charging VAT at all stops having that advantage, because the platform takes it regardless of whether the seller wanted to pay it.
The Treasury is reportedly planning to spend the proceeds on business rates relief for the high street — specifically, raising the threshold so that an estimated 140,000 small retailers pay no business rates at all, a cut Prime Minister Andy Burnham pledged during his campaign to become MP for Makerfield. City A.M. reports that Burnham had originally suggested paying for this by taxing "out of town" warehouses more heavily, a plan retail bosses fiercely opposed on the grounds it would raise costs that get passed on to shoppers, and that Healey has now ruled out a warehouse tax in favour of the marketplace VAT route instead. None of this is confirmed government policy: a Treasury spokesperson told both papers only that "decisions on tax are a matter for the chancellor to set out at fiscal events rather than routinely commenting on rumour, speculation or proposals." The Budget lands on 28 October 2026.
Worked numbers: what changes for an actual seller
Take an illustrative example to see what the mechanics actually mean day to day. Say you run a homeware business selling exclusively through Amazon, turning over £180,000 a year excluding VAT, comfortably above the £90,000 threshold, and you are already VAT-registered and charging the standard 20% rate correctly on every sale. Your output VAT for the year is £36,000 — roughly £9,000 a quarter, or £3,000 a month.
Under today's rules, Amazon pays you the full VAT-inclusive sale price in your regular payouts. You are meant to set that £3,000 a month aside yourself and remit it to HMRC on your quarterly return — money that sits in your bank account for weeks before it leaves, which is exactly the "free" working capital that tempts businesses into cash flow trouble if they spend it before the return is due. Under the reported plan, Amazon would deduct the £36,000 at the point of sale and pay it to HMRC directly, paying you the net amount. Your annual VAT bill is identical either way — £36,000 — because you were charging it correctly already. What changes is that the money never touches your account at all, and your bank feed suddenly shows smaller payouts than your actual sales.
That last point is the one worth flagging to whoever does your bookkeeping now, before it happens rather than after: if your accounting software is set up to treat marketplace payouts as turnover, a net-of-VAT payout will understate your real sales and your real profit. Turnover for Companies House, for your own management figures, and potentially for other thresholds that are tested on turnover, needs to be the gross sale price your customer paid, grossed back up from the net payout — not the number that lands in the bank.
What it means for you, by situation
If you sell through a marketplace and turn over under £90,000, nothing in this proposal touches you directly yet. But it is worth treating as a prompt rather than ignoring: £90,000 is the same rolling 12-month figure that already forces VAT registration regardless of this policy, so if you are anywhere near it, now is the moment to start checking it monthly rather than at your year end.
If you are over £90,000 and already VAT-registered correctly, the honest answer is that very little changes for you beyond the bookkeeping point above — your tax bill stays the same, only the plumbing moves. If you are over £90,000 and have not been charging VAT properly, this closes that gap automatically and immediately, with no further decision on your part: the marketplace will not have the option of paying you gross once the rule bites.
If you run a bricks-and-mortar shop paying business rates, the relevant thing is the funding link: this is reportedly the mechanism the government intends to use to pay for the rates threshold increase it has already promised. That is a genuinely useful thing to know is in motion, but it is not yet a number you can put in next year's budget. Treat it as a reason to keep watching the Budget, not as money you can plan around before 28 October.
What's still uncertain, and when you'll know
Everything here is reported, not legislated. The Treasury has not confirmed the £90,000 threshold, the collection mechanism, the size of any business rates cut, or that any of this survives into the actual Budget unchanged. Dan Neidle's public push to lower the threshold or widen the scope suggests the detail could still move before 28 October. Layered on top of that, the Institute for Fiscal Studies warned this week that Healey's Budget risks being a "work of fiction" unless he finds roughly £35bn to cover existing spending pressures — a reminder that a popular, well-trailed measure like this one can still get scaled back, delayed, or redirected if the overall numbers do not add up. The one fixed date in all of this is 28 October 2026, when the actual Budget documents will say what, if anything, is really happening.
Two things to do this week
First, if you sell through a marketplace anywhere near or above £90,000 turnover, check with your bookkeeper now whether your turnover figure is based on gross sales or net marketplace payouts, so you are not caught out if net payouts quietly become the norm. Second, put 28 October in the diary and hold off changing pricing, systems or expectations until the actual Budget documents confirm the threshold and the mechanism — reported plans have moved before now, and the IFS has already flagged a funding gap that could affect what survives.
Getting your bookkeeping set up so turnover, VAT and net payouts reconcile automatically is exactly the kind of thing our Making Tax Digital service is built to handle, and it matters more, not less, if marketplaces start paying sellers net of VAT as standard. If you sell through a marketplace and want to check your own numbers are right before any of this takes effect, talk to us.