BHETA has welcomed the Government's announcement of new VAT responsibilities for online marketplaces in today's Budget, while warning that potential loopholes could undermine efforts to create a level playing field for UK businesses.
The announcement marks a further development in an area BHETA has been campaigning on since 2024, following growing concerns among members about the rapid increase in small-parcel imports and unfair competition from overseas sellers.
Under the new rules, which will take effect from 1 October 2027, online marketplaces will become responsible for collecting VAT on sales by UK VAT-registered businesses, as well as other
UK businesses generating annual sales of £90,000 or more on an individual platform.
The Government estimates the changes will raise £165 million in 2027–28, rising to £320 million in 2028–29, with the revenue helping to fund business rates support for high-street businesses.
However, the rules will exclude personal sales, second-hand goods and business-to-business transactions. BHETA believes it is important that these exclusions, together with the £90,000 per-platform threshold, do not create opportunities for businesses to avoid their tax obligations.
BHETA's Level the Playing Field Between UK and Overseas Sellers campaign has consistently called for greater fairness in the tax, product safety and regulatory responsibilities placed on businesses supplying UK consumers, regardless of where they are based.
Today's announcement follows earlier Government commitments to remove the £135 customs-duty exemption on low-value imports by October 2028 at the latest, another important issue raised through BHETA's campaign.
Steve Richardson, General Manager of BHETA, said:
"Fair competition has been one of our members' biggest concerns over the past two years, particularly as the volume of products reaching UK consumers directly from overseas has grown.
"Since launching our campaign in November 2024, BHETA has consistently argued that businesses selling to UK consumers should meet their tax and regulatory obligations, wherever they are based.
"We welcome the Government's announcement as further progress in addressing VAT non-compliance. However, there are potential weaknesses in the proposals which must not be overlooked.
"The £90,000 threshold, applied separately to each online marketplace, raises concerns about sellers spreading their turnover across multiple platforms to avoid detection. We also want reassurance that overseas businesses cannot continue to exploit the system by presenting themselves as UK-based sellers, and that exemptions for second-hand goods cannot be abused.
"These are genuine concerns for responsible UK suppliers who are already meeting their obligations and competing with sellers who may not be doing so.
"BHETA is not calling for unnecessary additional burdens on legitimate smaller businesses. We want a system that protects those operating fairly, while ensuring that businesses deliberately avoiding VAT cannot continue to gain a competitive advantage.
"The Government has made progress, but effective enforcement will determine whether these changes deliver the level playing field that our members have been calling for."
BHETA will continue to engage with Government and HMRC as the new arrangements are developed, seeking clarification on how sellers' turnover across multiple marketplaces will be monitored, how businesses' locations will be verified and how exemptions will be enforced.
The Association will also continue pressing for effective implementation of reforms to low-value imports and consistent product safety requirements for all businesses selling into the UK market.
Further information
Read about BHETA's campaign:
https://www.bheta.co.uk/lobbying-campaigns/level-the-playing-field-between-uk-and-overseas-producers
Source: HM Treasury, Budget 2026, 28 October 2026, paragraph 6.154.
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