VAT threshold for online sellers: adding up Shopify, Etsy and eBay sales against the £90,000 test

A shop selling on three channels has three dashboards and no total, and the VAT test is on the total. The threshold is £90,000 of taxable turnover in any rolling 12 months, counted across everything the business sells. A multichannel seller usually crosses it some months before the bank balance suggests.

The rule

GOV.UK says you must register if "your total taxable turnover for the last 12 months goes over £90,000". HMRC's Notice 700/1 makes the test "at the end of any month", looking back over "the previous 12 months or less". The tax year, the calendar year and your accounting year have nothing to do with it.

Two dates follow from the month you go over:

• You have to register "within 30 days of the end of the month when you went over the threshold".
• Your effective date of registration is "the first day of the second month after you go over the threshold".

There is a second, forward-looking test: you must also register if you expect taxable turnover to go over £90,000 in the next 30 days alone. Few small shops will meet that one.

What goes into the total

Every channel. GOV.UK defines taxable turnover as "the total value of everything you sell that is not VAT exempt or 'out of scope'". There is no allowance per channel. Shopify, Etsy, eBay, a market stall and a wholesale order are one figure.

Zero-rated goods. These are on GOV.UK's list of what to include. Its rates page shows children's clothes and books at 0%, so a shop selling only those charges no VAT on them and still counts every sale towards the £90,000.

Delivery you charge. HMRC's Notice 700/24 says that where the contract requires you to deliver, you make "a single supply of delivered goods", whether or not the delivery charge is itemised. The £3.95 a customer pays for postage is turnover, the same as the item.

Sales, not payouts. A payout is what the channel sends after taking its fees, and it is the number most owners know. The definition is the value of what you sell, which is what the customer paid. None of the HMRC pages we read says "before marketplace fees" in those words, so treat this as our reading of the definition and confirm it with your accountant.

Some services bought from abroad. GOV.UK's list includes "services you received from businesses in other countries that you had to 'reverse charge'". Ask your accountant whether any software, advertising or freelance bills from overseas suppliers fall into it.

Left out. Notice 700/1 says you do not include exempt supplies, or capital assets you have sold, such as equipment or a vehicle.

A worked example

An invented shop, twelve months to 30 September 2026:

The sales column adds up like this: £52,300 plus £27,900 is £80,200, and £11,100 more is £91,300. The payouts: £50,900 plus £24,300 is £75,200, and £9,700 more is £84,900.

The bank says £84,900 and the owner feels £5,100 short of the line. The test says £91,300, which is £1,300 over. The gap between the two columns, £6,400, is fees.

If September 2026 was the first month-end over £90,000:

• The shop must register by 30 October 2026.
• Its effective date is 1 November 2026.

GOV.UK's own example runs the same way: over the threshold in July, register by 30 August, registered from 1 September.

What registration does to a price

The standard rate is 20%. If a shop cannot raise its prices, the VAT comes out of the price the customer already pays, and that is one sixth of it. A £42 item carries £7 of VAT and leaves £35. Check it: £35 plus 20% is £42.

Marketplace buyers see one price, so the choice is to raise it or to keep one sixth less. Our Etsy and Shopify fee calculator shows what each channel already takes from the same order, and the VAT comes on top of that. Postage is in the same position: the Royal Mail prices from 5 October 2026 are a cost to you, and what you charge the customer for delivery is a sale with VAT in it.

If you find out late

GOV.UK is blunt: "If you register late, you must pay VAT on any sales you've made since the date you should have registered." Notice 700/1 adds that HMRC may charge a penalty "which could be equal to the amount of VAT you should have paid".

Take a shop making £7,600 a month of standard-rated sales that finds out three months after its effective date. Three months is £22,800. One sixth of that is £3,800, owed from money that has already been spent on stock and postage.

If it was a one-off

A single wholesale order or one very good December can push twelve months over the line. Notice 700/1, paragraph 3.7, allows an "exception from registration" where you can show HMRC that your taxable supplies will not go over the deregistration threshold in the next 12 months. GOV.UK gives that threshold as £88,000. You have to apply; HMRC decides. Staying quiet and hoping is late registration.

A ten-minute monthly routine

1. On the first working day of each month, download last month's sales report from every channel. Use sales, not payouts.
2. For each channel, add item prices and delivery charged. Do not subtract fees. Note refunds on a separate line and ask your accountant how to treat them.
3. Enter the figures in a sheet with one row per month and one column per channel.
4. Add the last 12 rows. That number is the test.
5. Pick a warning line well below £90,000. At that line, price every product with one sixth taken out and decide which prices have to move.
6. If the total goes over, note the month-end. You have 30 days from it.

Stock decisions change at the same moment, because margin does. Our reorder point calculator shows the cash each order ties up, which is worth re-running on the new margin.

This is general information, not tax advice. The figures are as GOV.UK and HMRC published them on the dates shown; an accountant should confirm your own position before you register or decide not to.