Selling online starts small. A few orders on Etsy, a weekend of sales on eBay, then your own website, then a busy Christmas. At some point a question arrives that no seller can ignore: do I need to register for VAT? Many sellers put it off because VAT sounds complicated, or because they assume selling through a marketplace means someone else handles it. Neither assumption is safe, and registering late can leave you paying VAT out of your own pocket.
The short answer: You must register for VAT when your taxable turnover goes over £90,000 in any rolling 12 months, or when you expect it to go over £90,000 in the next 30 days alone. It is turnover, not profit, and sales across every channel you sell on count together. You then have 30 days from the end of the month you crossed the line to register.
The £90,000 Threshold: The Two Tests
HMRC does not test your turnover once a year. It tests it constantly, in two ways, and the second one catches growing sellers out.
First, the backward look. At the end of every month, add up your taxable sales from the previous 12 months. Not the tax year, not your accounting year — a rolling 12 months, checked monthly. The moment that running total goes over £90,000, the clock starts: you must register within 30 days of the end of that month, and your registration takes effect from the first day of the second month after you crossed it. Cross the line in October, for example, and you must register by 30 November, with VAT applying from 1 December.
Second, the forward look. If at any point you expect your taxable turnover to go over £90,000 in the next 30 days alone — a viral product, a large wholesale order, a big Christmas push — you must register by the end of those 30 days, effective from the date you realised.
| VAT figure (2026/27, at time of writing) | Amount |
|---|---|
| Registration threshold (rolling 12 months) | £90,000 |
| Deregistration threshold | £88,000 |
| Standard VAT rate | 20% |
| Deadline after crossing the threshold | 30 days from month-end |
| Registration takes effect | First day of the second month after crossing |
The threshold has been £90,000 since 1 April 2024. Always check the current figure before acting, because thresholds can change at a Budget — but do not assume a rise is coming. Plan on £90,000.
What Counts Towards Your £90,000?
This is where online sellers most often go wrong. Taxable turnover means the total value of everything you sell that is not VAT-exempt or outside the scope of VAT. It includes standard-rated, reduced-rated and zero-rated sales. It does not include exempt sales. Crucially, it is your turnover, not your profit: your costs, fees and postage spending are irrelevant to the test.
And it is all of your selling, added together. If you sell handmade candles on Etsy, vintage clothes on eBay and prints through your own Shopify store, HMRC adds all three together. Selling through a marketplace does not take those sales out of your total.
A simple monthly habit prevents most surprises. On the last day of each month, total your taxable sales for the last 12 months across every platform, including your own website, and write the figure down. When it approaches £80,000, start preparing — prices, invoices and bookkeeping all need to change once you register, and a few weeks of preparation beats a panicked month-end.
Should You Register Voluntarily, Before £90,000?
You can choose to register below the threshold. Whether that helps depends almost entirely on who buys from you.
| Voluntary registration | Likely to help | Likely to hurt |
|---|---|---|
| Your customers are mostly VAT-registered businesses | They reclaim the VAT you charge, so your prices stay competitive | — |
| You buy a lot of stock and materials with VAT on them | You can reclaim input VAT on purchases and costs | — |
| Your customers are mostly ordinary shoppers | — | Shoppers cannot reclaim VAT, so a 20% price rise can lose sales |
| Your margins are thin and you compete on price | — | Added admin and accounting costs eat the benefit |
For a simple example, take a seller whose customers are small shops and boutiques that are VAT-registered themselves. Charging VAT costs those customers nothing in the end, because they reclaim it, while the seller reclaims VAT on stock and packaging. For a seller whose customers are ordinary shoppers on Etsy, the same move means either raising prices by up to 20% or absorbing the VAT from the margin. There is no universally right answer — it is a business decision, and an accountant can run your own numbers in an hour. What you should never do is register voluntarily without understanding that you must then charge VAT, file returns and keep digital records from day one.
How to Register for VAT
Registration itself is straightforward, and it is done online. You will need your business details, your bank details, your turnover figures and an estimate of your expected turnover. If you are a sole trader, you register as yourself; a limited company registers as the company. You can find the official route to register for VAT on GOV.UK.
Once registered, HMRC sends your VAT number, usually within a few working days, and you must show it on your invoices. From your effective date, you charge VAT on standard-rated sales, keep digital VAT records, and file returns, usually every three months, through Making Tax Digital compatible software. You can also reclaim VAT on business purchases, subject to the usual rules.
A Worked Example: What VAT Means in Pounds
Numbers make VAT concrete, so here is an illustration. Imagine Sara, who sells handmade candles from home — on Etsy and through her own website — and whose rolling 12-month taxable turnover reaches £96,000 in October. She must register by 30 November, and her registration takes effect on 1 December.
From 1 December, on £12,000 of standard-rated candle sales in a quarter, the VAT included in those sales is £2,000 (£12,000 × 20/120). Sara either adds VAT to her prices, so customers pay it, or absorbs it from her margin — but HMRC still expects that £2,000. She can also reclaim VAT she paid on wax, jars, packaging and postage services, which softens the bill. The timing is the lesson: her VAT duty starts on 1 December whether or not she has repriced her shop.
3 Mistakes Online Sellers Make With VAT
- Checking turnover once a year. By the time the accounts are done, the registration date may be months in the past, and VAT is owed from the correct date even if you never charged it.
- Assuming marketplace sales do not count. They do. Add every channel together, every month.
- Waiting until £90,000 to think about prices. Repricing a shop, updating listings and telling regular customers takes time. Start at £80,000, not £90,000.
If you have already gone over the threshold without registering, do not wait for HMRC to notice. Register now, work out what is owed from the correct date, and tell HMRC yourself — an unprompted disclosure generally leads to a lower penalty than being found out. Our main guide to VAT registration explains the threshold, rates and registration process in full, and it is worth reading alongside this article before you act.
Frequently Asked Questions
Do I need to register for VAT if I only sell on Etsy or Amazon?
Selling only through a marketplace does not exempt you. If your taxable turnover goes over £90,000 in a rolling 12 months, or you expect it to in the next 30 days, you must register, whatever platform you sell on.
Does the £90,000 threshold count sales on all my platforms together?
Yes. Add your taxable sales from Etsy, eBay, Amazon, TikTok Shop and your own website together. If you are a sole trader, add every business you run as well — the threshold applies to you as a person, not to each shop separately.
What happens if I register for VAT late?
HMRC can backdate your registration, so you owe VAT on sales from the date you should have registered, even if you did not charge it to customers. A penalty may also apply, depending on how much is owed and whether you told HMRC yourself.
Can I deregister for VAT if my sales fall?
Yes. If your taxable turnover falls below £88,000 and you expect it to stay there, you can apply to cancel your registration. Deregistration is not automatic — you apply through your VAT online account, and you may owe VAT on stock and assets held at the deregistration date.
Conclusion
VAT registration is not a punishment for growing — it is the line every growing UK online seller eventually crosses. Watch your rolling 12-month turnover monthly, add every channel together, and start preparing when you approach £80,000 rather than waiting for £90,000. Register on time, reprice honestly, and keep clean digital records, and VAT becomes routine admin rather than a surprise bill.
