VAT for UK online sellers: who owes what, and when to register
Online sellers based in the UK must register for VAT once taxable turnover passes £90,000 in any rolling 12 months, and that means sales, not the payouts after fees. Who owes the VAT on a sale then depends on where the seller is based, where the goods are and how they are sold. This guide sets out the cases and works through the threshold test and what it does to one product's profit. It is general information, not advice on your own tax position.
Who accounts for the VAT
| Your position | Sale | Who accounts for the VAT | Source |
|---|---|---|---|
| UK business, registered for VAT, goods in the UK | To a UK customer, through a marketplace or your own shop | You | HMRC marketplace rules cover overseas sellers only |
| Overseas business, goods in the UK at the point of sale | Through an online marketplace | The marketplace | GOV.UK |
| Overseas business, goods in the UK at the point of sale | Directly, through your own shop | You, and there is no threshold | GOV.UK |
| Goods sent from abroad, consignment of £135 or less | Through an online marketplace to Great Britain | The marketplace | GOV.UK |
| UK business | Goods sent to a customer outside the UK | Zero rate, if you meet the conditions | Notice 703 |
| UK business, stock held in an EU warehouse | To EU customers | UK registration does not settle this: check the rules of that country | GOV.UK |
The threshold test, month by month
You look back at the last 12 months at every month end, not at your tax year. This shop's figures are made up.
| 12 months ending | Taxable turnover | Over £90,000? |
|---|---|---|
| 31 May 2027 | £86,100 | No |
| 30 June 2027 | £88,400 | No |
| 31 July 2027 | £91,300 | Yes |
Per GOV.UK, this shop must register by 30 August 2027, and its registration takes effect on 1 September 2027. A second test looks forward: if you realise turnover will pass £90,000 in the next 30 days alone, you must register by the end of those 30 days, and the date is the day you realised.
Count the sales, not what reached your bank. A marketplace payout is net of fees, so one Amazon settlement can pay £1,300.00 on £1,900.00 of sales. The 12 month count covers all your taxable sales, on every channel.
What registering does to one product
The shop keeps its price of £24.00 after registering, since customers will not pay more. One sixth of that price is now VAT. The cost and fee figures are made up, and any VAT you can reclaim on them is ignored here.
| Per unit | Before registering | After registering |
|---|---|---|
| Price paid by the customer | £24.00 | £24.00 |
| VAT to HMRC | nothing | £4.00 |
| Stock cost | £6.00 | £6.00 |
| Fees and shipping | £8.00 | £8.00 |
| Left per unit | £10.00 | £6.00 |
Profit per unit falls by 40 percent on the same sale. That is why the date matters: at the threshold, plan your prices and costs before the effective date, not after it. Run your own product through the Amazon and Shopify fee and VAT calculator.
Export evidence has a clock
A direct export can only be zero rated if you meet all the conditions. Per Notice 703 (updated 4 March 2026), you need evidence of the supply and evidence of export, such as a customs departure confirmation or authenticated transport documents, and both within 3 months of the time of supply. An order and a tracking number alone may not be enough, so check your carrier's paperwork before you zero rate. The buyer's country may also charge import VAT on arrival. Sellers can register for the Import One Stop Shop in an EU country, and may need an EU intermediary.
Once you are registered
- Keep digital records of each supply: the time of supply, the net value and the rate (Notice 700/21).
- Keep your VAT records for at least 6 years.
- Correct past errors on your next return if their net value is no more than £10,000, or no more than 1 percent of box 6 up to £50,000. Above that, or if deliberate, notify HMRC separately. The time limit is generally 4 years (Notice 700/45).
What Octobooks does
Octobooks prepares the UK VAT return's nine boxes from your posted entries, and shows the entries behind each figure. You submit the return: direct filing is not switched on yet. Octobooks does not tell you when you must register; the test above is yours to run.
Keep going
- Amazon seller accounting: one settlement, line by line
- Shopify payouts: one week and one month end
- Can AI prepare my VAT return?
Sources: GOV.UK: when to register, marketplaces, direct sales, Notice 703, Notice 700/21, Notice 700/45. All seen 4 November 2026.