UK Proposes VAT Collection Rules for Major E-commerce Platforms, Targeting Sellers with Annual Sales Above £90,000

The UK government is considering a proposal to require major e-commerce platforms to collect and remit value-added tax (VAT) directly on behalf of eligible sellers with annual sales exceeding £90,000. The plan, reportedly proposed by Chancellor Rachel Reeves, would cover transactions conducted through platforms such as Amazon, eBay and Temu. If implemented, the measure could significantly change how VAT is collected in the UK’s online retail market.

Under the proposed framework, e-commerce platforms would take greater responsibility for VAT compliance on qualifying transactions, rather than leaving individual sellers to manage all tax obligations independently. The policy is intended to address VAT evasion, strengthen tax compliance and create a more consistent competitive environment for online retailers. By shifting collection responsibilities to major platforms, the government aims to improve oversight of cross-border e-commerce transactions and reduce unpaid tax liabilities.

Amazon has reportedly expressed support for the proposal, although the projected revenue impact remains uncertain. The plan is estimated to generate approximately £700 million in additional annual tax revenue, below the government’s stated target. Its actual impact will depend on the final policy design, platform implementation and the response of sellers operating in the UK market. Further details, including the precise scope and enforcement arrangements, have not yet been officially announced.

For cross-border e-commerce businesses, the proposal highlights the growing importance of VAT compliance, accurate sales reporting and clear coordination with online marketplaces. Sellers shipping goods to UK customers should monitor official announcements and review how potential changes could affect their tax obligations, pricing structures and profit margins. Until the government publishes the final rules and implementation timetable, businesses should treat the measure as a proposal rather than an enacted requirement.