VAT is one of the most misunderstood parts of selling on eBay in the UK. Some sellers register too late and face penalties; others do not realise they never needed to. This guide covers the main rules in plain English.
The VAT registration threshold
If your business is established in the UK, you must register for VAT when your taxable turnover goes over £90,000 in any rolling 12-month period, or when you expect it to go over that amount in the next 30 days. The threshold has been £90,000 since 1 April 2024. The deregistration threshold is £88,000, below which you can ask HMRC to cancel your registration.
What counts towards the threshold?
Taxable turnover is your total sales of goods and services that are subject to VAT, across all your sales channels. Sales on eBay, Amazon, Etsy and your own website all add together into a single figure. It is a rolling total across the previous 12 months, not a calendar or tax year, so check it every month.
Non-UK businesses
If your business is not established in the UK but makes taxable supplies in the UK, there is no threshold, and registration may be required from the first taxable sale. Rules for goods sent from overseas, imports and low-value consignments are different again, so take specific advice if you ship from outside the UK.
Registering voluntarily
You can register before reaching the threshold. Reasons to consider it:
- You can reclaim VAT on stock, equipment and some business costs.
- Some suppliers and wholesalers deal more readily with VAT-registered businesses.
The trade-off is that you must charge VAT on your sales (which either cuts your margin or raises your prices), keep digital records and file VAT returns, generally quarterly through Making Tax Digital compatible software. If most of your customers are private consumers, registering early can reduce your competitiveness on price.
Adding a VAT number on eBay
Once you are VAT registered, add your VAT number in your eBay account settings so your listings and invoices can show VAT correctly. Check eBay's current help pages for the exact steps, which can change.
HMRC reporting and income tax
VAT is separate from income tax. Since 1 January 2024, digital platforms such as eBay have been required to collect and report seller information to HMRC. The reporting triggers include 30 or more sales of goods in a year or receiving about €2,000 (roughly £1,700). Being reported does not automatically mean you owe tax, but if you are trading you generally need to register for Self Assessment once trading income goes over the £1,000 trading allowance and keep proper records.
Practical steps for eBay sellers
- Keep a running total of your rolling 12-month taxable turnover.
- Keep every invoice, receipt and eBay payout statement.
- Use accounting software, ideally one compatible with Making Tax Digital.
- Set a reminder to review your position when you pass about 80% of the threshold.
- Speak to an accountant before you register or deregister.
Where we fit in
We do not give tax advice, but we help sellers grow their eBay sales and keep the account in good standing. If you are planning to scale, see our sales growth strategy service and our guide on starting out on eBay UK.
Frequently asked questions
£90,000 of taxable turnover in any rolling 12-month period, or if you expect to exceed it in the next 30 days. Sales across all your channels, including eBay, are added together.
Not unless your business must be, or chooses to be, VAT registered. You must register if your taxable turnover goes over the threshold. Non-UK businesses making taxable UK supplies may have to register from the first sale.
Digital platforms must report certain sellers to HMRC, including those with 30 or more sales or around €2,000 received in a year. Being reported does not by itself mean you owe tax.
