eBay Warns Healey's Online VAT Crackdown Must Not 'Unfairly' Hit Small British Sellers

Business · By · 2026-10-19 · 3 min read
High street shops in Oxford, England
Photo: Roger Cornfoot / Geograph Britain and Ireland via Wikimedia Commons (CC BY-SA 2.0)

I have lost count of the times I have watched a high street shop close its shutters for the final time while, a few streets away, a lorry unloads the same goods at a fulfilment centre whose owner barely pays a fraction of the tax. That is the fight behind one of the biggest Budget rumours of the year — and this week, eBay's boss finally waded in, warning the Chancellor not to hammer small British sellers while he is at it.

Photo: Roger Cornfoot / Geograph Britain and Ireland via Wikimedia Commons (CC BY-SA 2.0). High street shops in Oxford — physical retailers hope the VAT crackdown will level the playing field.

The row centres on plans reportedly being drawn up by Chancellor John Healey for his first Budget on 28 October. According to the Times, online marketplaces — Amazon, eBay and Temu — would be made responsible for collecting VAT at source from every retailer selling on their platforms with annual turnover above £90,000. The target is overseas sellers accused of dodging VAT by routing sales through shell companies, and the Treasury hopes to raise up to £1 billion ($1.33 billion) — money that could fund business rate cuts for physical shops.

Online marketplace VAT crackdown: what Healey is planning

Right now, marketplaces must already collect VAT on sales made by overseas businesses to UK customers. But enforcement has been leaky, and foreign firms have been accused of slipping through with shell-company structures. The reported change would widen the net dramatically: every seller over the £90,000 turnover line, wherever they are based, would have VAT collected at source by the platform itself.

Interestingly, Amazon — hardly the taxman's best friend down the years — has reportedly welcomed the proposal, and even estimated it could raise around £700 million for the Treasury, according to the Times. Ministers are also understood to have looked at a warehouse tax and rejected it. The one thing nobody will confirm is the link to business rates. A Treasury spokesperson offered the standard line: “As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events rather than routinely commenting on rumour, speculation or proposals.”

eBay: the online VAT crackdown must not hit small sellers

That is where Eve Williams, eBay UK's vice-president and general manager, stepped in. Speaking to the Press Association, she backed the principle — “We strongly support that we ensure overseas sellers meet their legal and tax obligations, because I want to make sure our domestic sellers in the UK get the fairest chance to succeed” — but insisted any change must “definitely” protect small UK businesses.

Her specific ask: raise the allowance to £3,000 to make it easier for people to test a business idea and start earning. She has already raised the case with the Treasury, in talks eBay has held, arguing that tight thresholds are what stop growth: “Often, it is those really tight kinds of thresholds that inhibit people's growth and so thresholds around things like VAT, around national insurance for employees, that are the things that actually stop growth.”

High streets push back — but warn of new loopholes

The British Independent Retailers Association (Bira), which represents more than 6,000 independent retailers, welcomed the plans but spotted a hole. Chief executive Andrew Goodacre warned that the £90,000 threshold and a possible exemption for second-hand products would simply be exploited by sellers looking to evade VAT, leaving the Treasury with far less than the promised £1 billion. “The headline is positive, but the devil is in the detail,” he said. “All sales should incur VAT, full stop.”

The backdrop is a high street under genuine pressure. ONS figures published in September showed UK retail jobs had fallen to a record-low four-quarter average of 2.78 million in the year to the second quarter of 2026, down 62,000 year on year. The Retail Jobs Alliance — whose members include M&S, Tesco, Sainsbury's, Primark, Morrisons and Kingfisher — has been urging the government to exempt all bricks-and-mortar retailers from the highest business rates multiplier, currently 50.8p.

What the Budget on 28 October could decide

This is not Healey's first swing at online retail. Back in June he said Britain would scrap customs duty relief on low-value imports from October 2028 — a move squarely aimed at fast-fashion giants like China's Shein that ship millions of cheap parcels under the threshold. The VAT crackdown would be the other half of that pincer.

My read: eBay's warning is less about sympathy for small sellers than it is about self-interest — its UK marketplace runs on exactly the kind of micro-entrepreneur a clumsy rule could catch. But on the substance, Williams and Goodacre are circling the same truth: a crackdown that exempts sellers under £90,000 and second-hand goods is an invitation to game it. Close the loophole properly or do not bother. We find out which way Healey jumps on 28 October.

Editor's note: no video is embedded with this article — we could not verify a reputable-outlet video specifically covering this story on YouTube. The source links below carry the full reporting from the Press Association (via Western Morning News), Reuters, Talking Retail and TheIndustry.fashion.

Sources

#eBay VAT crackdown#online marketplace VAT UK#Healey Budget VAT Amazon eBay#online sellers VAT £90000#Budget October 28 VAT

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