UK Targets Marketplace Sellers: VAT Liability Extension and a Faster End to the £135 Relief

On 23 June 2026 the UK Treasury published its “Tax Update 2026” package — forty measures, with online sellers and low-value imports firmly in the crosshairs. Two items matter most for e-commerce businesses.

1. Marketplace VAT liability may extend to UK-based sellers

Since 2021, online marketplaces such as Amazon and eBay have been liable for VAT on certain sales they facilitate for overseas sellers. HMRC considers those reforms a success against offshore non-compliance — but they never touched domestic sellers. The government now estimates that tens of thousands of UK-based businesses trading through marketplaces are not meeting their VAT obligations, with losses potentially running to hundreds of millions of pounds.

A joint HMT/HMRC consultation, open from 23 June to 18 August 2026, proposes extending marketplace liability so that platforms would account for VAT on sales they facilitate for UK businesses as well. To protect genuinely small sellers below the VAT registration threshold, two options are on the table: a minimum platform sales threshold before liability kicks in, or a VAT rate relief for sellers under the registration threshold. Private individuals selling second-hand goods would remain out of scope, and the treatment of second-hand sales by businesses is still undecided.

If adopted, this would be the biggest change to UK marketplace VAT since 2021. Sellers relying on staying under the radar should note the direction of travel: marketplaces already share transaction data with HMRC, and discrepancies between declared sales and platform reports are flagged automatically.

2. The £135 import duty relief ends sooner

At Autumn Budget 2025 the Chancellor announced the removal of customs duty relief on low-value imports (goods of £135 or less), originally “by March 2029 at the latest”. In the June package the government confirmed it will accelerate delivery by six months, to October 2028, explicitly to back high-street retailers against cheap direct-from-factory imports.

The consultation that closed in March 2026 signalled what the new regime will likely include: item-level data submitted by sellers and marketplaces, optional simplified duty “buckets” instead of full 10-digit classification, a possible administration fee, potential integration of VAT and duty collection into a single registration — and, significantly for overseas sellers, a requirement for non-UK-established sellers and marketplaces to appoint a UK fiscal representative.

Sources: HM Treasury / HMRC announcements and consultation documents, 23 June 2026; Autumn Budget 2025. Reference information compiled by VAT Support — informational only, not tax advice.