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UK's Healey to make online marketplaces collect tax from sellers - Finance news and analysis from Global Banking & Finance Review
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UK's Healey to make online marketplaces collect tax from sellers

Published by Global Banking & Finance Review

Posted on October 28, 2026

2 min read

· Last updated: October 28, 2026

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UK to Require Online Marketplaces to Collect VAT from Platform Sellers by 2027

New VAT Collection Responsibilities for Online Marketplaces

Finance Minister Announces VAT Policy Change

LONDON, Oct 28 (Reuters) - British finance minister John Healey said on Wednesday he would make online marketplaces responsible for collecting value added tax (VAT) owed by retailers selling on their platforms.

"I will strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online," Healey said in his budget speech to parliament.

Impacted Platforms and Implementation Timeline

The change means that online marketplaces, such as Amazon, eBay, Temu, Shein and Alibaba, will become responsible for collecting the VAT which is charged on sales by sellers on their sites.

Implementation Date and Policy Goals

The finance ministry said the change, to be implemented from October 2027, is designed to tackle VAT evasion and support competition by helping ensure businesses that pay the tax they owe are not undercut by those that do not.

Scope of the New VAT Rules

The rules will apply to UK businesses that are VAT registered or make sales of more than £90,000 ($120,000) on an individual online marketplace.

Revenue Impact and Support for Physical Stores

Use of Raised Revenue

Healey said revenue raised would help fund business rate cuts for physical stores.

Exchange Rate Information

($1 = 0.7527 pounds)

Reporting Credits

(Reporting by David Milliken and James Davey; Editing by Toby Chopra)

Key Takeaways

  • Online marketplaces will collect VAT on behalf of sellers exceeding £90,000 annual sales from October 2027, closing a tax loophole currently exploited by some overseas and UK sellers
  • The policy builds on 2021 reforms that targeted non‑compliant overseas sellers and extends liability to UK businesses to level the playing field for compliant firms (gov.uk)
  • Revenue raised is expected to fund cuts to business rates for physical stores, supporting the high‑street economy (marketscreener.com)

References

Frequently Asked Questions

What VAT change is the UK government making for online marketplaces?
From October 2027, online marketplaces must collect VAT owed by retailers selling on their platforms.
Which platforms will be affected by the new VAT rules?
Platforms such as Amazon, eBay, Temu, Shein, and Alibaba will be required to collect VAT from sellers.
Who will the new VAT collection rules apply to?
The rules apply to UK businesses that are VAT-registered or make sales above £90,000 on a marketplace.
What is the purpose of this VAT collection change?
The change aims to combat VAT evasion and ensure fair competition for businesses paying their taxes.
When will the new VAT collection policy take effect?
The policy will be implemented from October 2027.

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