Chancellor targets Amazon and Temu in tax crackdown to deliver Budget for ‘white van man’
The Chancellor is reportedly considering a tax change that would make large online marketplaces collect VAT from sellers using their platforms. The proposal aims to curb foreign retailers avoiding tax and undercutting British businesses, while raising money for business rates relief for high street shops.
The rules would cover sellers with annual turnover above £90,000 and could raise up to £1bn. Tax expert Dan Neidle said the change was welcome but warned that loopholes could remain unless marketplaces were made responsible for all VAT on sales. The Chancellor faces pressure ahead of next month’s Budget, while the IMF has upgraded its forecast for UK growth in 2026 to 1.3 per cent.
- Online marketplaces may have to collect VAT from larger sellers.
- The change could raise up to £1bn for high street business rates relief.
- A tax expert warns sellers could still exploit gaps in the rules.
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VAT is a tax on many goods and services, usually included in the price paid by the customer. In Britain, businesses whose taxable turnover exceeds £90,000 a year generally have to register for VAT and account for it to HM Revenue and Customs.
Online marketplaces such as Amazon and Temu connect shoppers with third-party sellers, including businesses based overseas. The proposal concerns who must collect and pay VAT on those sellers’ sales, a responsibility that currently can depend on the seller and the type of transaction.
The issue matters because differences in tax compliance can affect the prices offered by online sellers and the position of shops on British high streets. Business rates are a separate tax on many commercial properties, and changes to them can affect the costs faced by shops.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Making large marketplaces collect VAT could help ensure overseas sellers pay tax on the same basis as British businesses, reducing an unfair competitive advantage and supporting high street shops through business rates relief. The change could also raise public revenue, while placing collection duties on platforms that are better positioned to handle them than individual small sellers.
The case against
Making marketplaces responsible for sellers’ VAT could add compliance costs and complexity, which may be passed on to small businesses or consumers and could reduce the range of sellers using these platforms. A threshold-based scheme may also leave loopholes and uneven treatment, so the expected revenue and competitive gains could be less than claimed unless the rules are carefully designed.