Britain plans to require online marketplaces to collect VAT from business sellers with annual turnover above GBP 90,000, potentially raising GBP 1 billion to fund business rates cuts for physical retailers and tackle VAT avoidance by overseas sellers.
Britain plans to require online marketplaces, including Amazon, eBay and Temu, to collect VAT from business sellers with annual turnover exceeding GBP 90,000.
The proposed measure is expected to raise up to GBP 1 billion to fund business rates cuts for physical retailers and is expected to be announced by Finance Minister John Healey in the Budget on 28 October 2026.
The proposal aims to address concerns about VAT avoidance by overseas online sellers and reduce their tax advantage over traditional British retailers. Under the plan, marketplaces would collect VAT at source from eligible sellers operating through their platforms.
Amazon has welcomed the proposal and estimated that the measure could generate around GBP 700 million for the Treasury.
The plan follows Britain’s decision to abolish customs duty relief on low-value imports from October 2028.
