The United Kingdom government is preparing to tighten tax rules for online marketplaces such as Amazon, eBay and Temu, in a move expected to raise up to £1 billion for the Treasury and help fund business rate relief for high street retailers.
The proposed measure would make online platforms responsible for collecting value-added tax (VAT) from businesses selling goods through their websites. It is intended to tackle tax avoidance by some overseas sellers who use weaknesses in enforcement to undercut retailers operating from physical shops.
The plan is expected to feature in Chancellor John Healey’s first budget, scheduled for October 28. The government is seeking ways to support smaller businesses while managing pressure on public finances and avoiding additional borrowing.
Under the reported proposal, the rules would affect business sellers with annual turnover above £90,000. The additional revenue could help finance reductions in business rates, which are a significant operating cost for many high street shops.
The proposal comes amid growing concerns among British retailers about competition from overseas online sellers, particularly those able to offer lower prices.
However, the plans have not yet been formally confirmed. The Treasury has said tax decisions will be announced at the appropriate fiscal event.
If implemented, the changes would shift more responsibility for VAT compliance onto digital platforms and could reshape how online sellers meet their UK tax obligations.
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