Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer As an online seller you pay income tax on your profit, which is your sales less allowable costs, through Self Assessment. You must register for VAT once your taxable turnover passes £90,000. Marketplaces such as Amazon handle some VAT for you, but the responsibility for getting your position right remains yours.

What you need to get right

  1. Income tax on profit. Report your sales and costs, including fees, postage, packaging and stock, on your Self Assessment return.
  2. The VAT threshold. Register once taxable turnover passes £90,000 on a rolling 12 month basis.
  3. Marketplace VAT rules. For some sales, the marketplace collects and accounts for VAT, but you still report your own position correctly.
  4. Importing stock. Import VAT and duty apply when you bring goods into the UK, and there are schemes to manage the cash flow.
  5. Records. Keep marketplace reports, fees and stock records, which are essential for an accurate return.

Where online sellers slip up

Common problems are forgetting that marketplace fees and postage are allowable costs, missing the VAT threshold because sales grow fast, and not separating personal and business selling. Getting the structure and records right early saves a great deal later.

Scaling your online shop?

Online selling tax gets complicated quickly with VAT, imports and marketplace rules. TaxTune keeps your records straight, watches your VAT threshold, and files everything correctly.

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Frequently asked questions

Do I pay tax on Amazon or eBay sales?

Yes, if you are trading. You pay income tax on your profit, which is your sales less allowable costs such as fees, postage and stock, reported through Self Assessment.

When do online sellers need to register for VAT?

Once your taxable turnover passes £90,000 in any rolling 12 month period, the same threshold as any other business. Fast growing sellers need to watch this carefully.

Does Amazon handle VAT for me?

For some sales, marketplaces collect and account for VAT, particularly for overseas sellers or certain imported goods. You are still responsible for your own overall VAT position.

What costs can online sellers claim?

Marketplace and payment fees, postage and packaging, the cost of stock, software, and a share of home and equipment costs, among others.

Do I pay tax if selling is just a hobby?

Occasional selling of personal items is usually not taxable. If you buy or make goods to sell for profit, you are trading and the £1,000 trading allowance and Self Assessment rules apply.