UK Budget to Extend Marketplace Deemed Supplier VAT Rules to Domestic Sellers

• The UK 28 October 2026 Budget is expected to extend the deemed supplier VAT regime to UK-established sellers on marketplaces, making marketplaces responsible for calculating, collecting, and remitting VAT to HMRC on domestic B2C marketplace sales.
• The measure would align domestic sellers with the existing rules for non-UK sellers and is projected to raise about £1 billion a year in VAT revenue.
• The reform is aimed at closing loopholes where sellers allegedly misstate UK establishment to avoid VAT, simplifying compliance and reducing fraud.
• It could effectively remove the benefit of the £90,000 VAT registration threshold for micro-businesses and hobby sellers selling via marketplaces, forcing VAT to be charged on those sales.
• Potential knock-on effects include inflationary pricing, more complex compliance for omnichannel sellers, clashes with the flat rate scheme, and increased refund-only positions for some sellers.

Source: vatcalc.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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