The short answer is yes. UK eCommerce businesses selling on eBay must pay VAT on selling fees regardless of whether or not they are VAT-registered businesses. However, as with most things in the tax world, there is a longer, more in-depth explanation, too, and that’s what we will look into in this article.
We’ll cover the following areas to help you understand just what VAT for eBay sellers needs to be paid, and on which eBay selling fees are VAT payable:
– The various types of eBay fees.
– Which fees incur the standard 20% VAT rates.
– The fees that incur 0% VAT.
– What does zero-rated VAT amount mean?
– When do you need to register your business for VAT?
– Why the support of a specialist eCommerce accountant can help manage your eBay business.
The different types of eBay fees and their VAT requirements
As an eCommerce business in the UK, you must pay several different selling fees if you choose to sell your product(s) via an eBay account.
VAT will be included (or added) to all eBay fees. If you are a personal seller, the fees will include VAT, and if you are a business seller, VAT will be added to your fees. In either case, your fee invoice will display the VAT proportion of the charges.
So, what is the VAT rate on these eBay selling fees?
eBay fees incurring 20% VAT
As we covered above, there are several different types of eBay selling fees, and for the most part, they incur the standard 20% VAT for UK sellers using eBay Managed Payments.
Let’s break this list of fees down:
Listing fees – You must pay when your monthly allowance of free listed items has been used up.
Final value fees – This is a percentage charge of the total sale amount (including product price, postage and taxes), as well as a fixed charge of 30p for each order – the variable fee differs for different categories and can be found here: eBay Fees for Business Sellers
Optional listing upgrade fees – eBay sellers can upgrade their listings by adding a ‘Buy It Now’ value, double category listings, International Site Visibility, and Reserve Prices. However, these upgrades come at a cost – plus VAT.
Basic eBay Shop: eBay sellers can pay £27 a month to get 100 free monthly auction listings and 250 fixed-price listings, an eBay storefront and Shop listings and access to Terapeak. Total value of this is stated as £105
Featured eBay Shop: If you want more included with your monthly subscription then for £77 a month you can get 600 free monthly auction listings and 1500 fixed-price listings, your eBay storefront and shop listings, access to Terapeak, European sales booster, Free listings in 13 countries and a £10 eBay packaging voucher. The total value of this is stated as £237
Anchor eBay Shop: If you want the ‘Gold Standard’ subscription, then this is your level. It’s not cheap at £437 a month, but you get a lot more included with your monthly subscription! You get 1000 free monthly auction listings and Unlimited fixed-price listings, your eBay storefront and shop listings, access to Terapeak, European sales booster, Free listings in 13 countries, Free listing in 2 categories and a £20 eBay packaging voucher. You also get an invite to ‘Concierge’ customer service. The total value of this is stated as £1173 a month
Dispute fees – As part of its policies, if any disputes are raised on sales, eBay charges the seller £14 per dispute.
International sale fees – If a sale is made from a UK-based eBay business and the shipping address is in another country, an international sale fee will be added tax and incurred.
Seller currency conversion charge – If your registered business address is in the UK, eBay charge an international fee when the delivery address for the item (entered by the buyer during checkout) is outside the UK, as shown in the table below.
This fee is calculated on the total amount of the sale and is automatically deducted from your sales proceeds. The total amount of the sale includes the item price, any handling charges, postage, taxes, and any other applicable fees.
|Eurozone & Northern Europe*
|US & Canada
|All other countries
|*Northern Europe: Denmark, Finland, Iceland, Norway, Sweden.
Zero-rated eBay fees
Although a majority of eBay selling fees incur the standard 20% VAT rate, there are a couple of zero-rated ebay seller fees that don’t incur any VAT at all (0%).
What does zero-rated VAT mean?
When an item is zero-rated, it means that although they’re still eligible for VAT, the VAT charged to customers is 0%. Where eBay selling fees are concerned, this covers postage services (shipping costs).
Examples of zero-rated eBay fees are:
• eBay Packlink fees (the platform that powers eBay Delivery)
If you’re feeling unsure about anything to do with eBay seller VAT, we’d always recommend speaking to an accountant who is well-qualified to give you the right guidance – spoiler alert – we can help you there!
Below, we share just some of the reasons why hiring a specialist eCommerce accountant, in particular, would be so advantageous to your eBay business.
When do you need to register your business for VAT?
In the UK, a company must register for VAT (Value Added Tax) if its taxable turnover exceeds the VAT registration threshold over a 12-month period.
Currently, the VAT registration threshold is set at £85,000 and this includes the total value of everything sold (your total turnover).
Companies can also register for VAT voluntarily even if their turnover is below this threshold, which can be beneficial in certain situations, such as reclaiming VAT on business expenses. Once registered, the company is responsible for charging VAT on its taxable supplies, submitting VAT returns, and paying any VAT due to HM Revenue & Customs (HMRC).
Companies should monitor their turnover closely and register for VAT within 30 days of their business turnover exceeding the threshold to avoid penalties.
Enhancing Your eBay Business with an eCommerce Accountant
The business landscape of eCommerce is filled with potential pitfalls and intricate tax regulations. It’s challenging to tackle these on your own, particularly if your primary focus is on your eBay store’s growth and profitability. Engaging the services of an eCommerce accountant can ease these complexities, providing the financial support you need to thrive in the online marketplace.
Expertise Tailored to Your Business Needs
At the heart of an eCommerce accountant’s value is their deep understanding of the industry and its unique business models. They bring insights from a broad array of online businesses, helping you avoid potential financial pitfalls and capitalise on growth opportunities. Whether it’s dropshipping, affiliate marketing, or an eBay store, an eCommerce accountant can offer bespoke advice catered to your business model.
Streamlined Tax Efficiency and Compliance
The realm of taxes and compliance can be a bewildering world for many online entrepreneurs. eCommerce accountants, however, are well-versed in these areas, offering a crucial line of defence against tax authorities and non-compliance. They can ensure your eBay business stays tax-efficient, helping you maximise profit margins while maintaining appropriate tax authority and complete compliance with relevant tax laws.
Navigating the eBay Platform
One of the primary benefits of hiring an eCommerce accountant for your eBay business lies in their familiarity with the eBay platform itself. With their understanding of platform-specific considerations such as eBay fees, VAT implications, and transactional complexities, they can offer tailored advice to improve your bottom line.
Understanding VAT Returns and Liabilities
Whether you’re new to the eCommerce sector or an experienced ebay seller, VAT can be a tricky area to navigate. eCommerce accountants can alleviate this burden by creating, interpreting, and managing your VAT Return. Their expertise enables you to understand your complete eBay VAT liabilities, allowing you to make informed financial decisions.
Simplifying Multi-Marketplace Selling
If you’re aiming to expand your eBay business across multiple marketplaces, an eCommerce accountant can simplify this process. They can provide guidance on tax implications, cross-platform transaction management, and financial best practices, making your transition to other platforms seamless and hassle-free.
Recommending the Best Online Accounting Software
Finally, eCommerce accountants can recommend suitable online accounting software tailored to your specific business needs. With an in-depth understanding of the features and benefits of various platforms, they can guide you towards the most beneficial and user-friendly software for your eBay business.
In summary, enlisting the services of an eCommerce accountant can be a game-changing move for your eBay business. Their industry knowledge, tax expertise, familiarity with eBay, understanding of VAT Returns, simplification of multi-marketplace selling, and software recommendations can dramatically streamline your operations and boost your profitability.
Do you sell on Amazon?
Discover if you can sell on Amazon without VAT registration, grasp the potential of Amazon’s vast marketplace, and understand your VAT obligations for international selling – all this and more at this link.