eBay UK remind sellers of upcoming VAT changes on fees

By Chris Dawson July 14, 2017 - 12:39 pm

eBay wrote to business sellers this week to remind them of the upcoming changes to how VAT will be charged on fees. From the 1st of August VAT will be applied to all fees and for the first time sellers will be able to reclaim the VAT on their VAT returns.

Historically sellers were unable to reclaim VAT but if they gave eBay their VAT number eBay would deduct the VAT at source. Then for the past 18 months eBay had special dispensation to not charge VAT for any business seller (even if they weren’t VAT registered).

The change to how eBay charge VAT

Now, from the 1st of August eBay UK will bill from a UK entity and charge VAT on fees and only those who are VAT registered and able to claim input tax credits will be able to recoup the VAT paid to eBay.

Many sellers have welcomed the move – eBay will be charging VAT as a UK entity and the VAT will be passed to the exchequer. Sellers, especially those who have been suspected of dodging VAT will find the VAT added to their eBay invoice and if they’re not registered for VAT with HMRC won’t be able to claim it back!

For sellers who can reclaim VAT it’s effectively just a cash flow and accounting change with no financial impact to their bottom line.

Those it will negatively impact

There are a few sellers who will be negatively impacted – sellers registered as businesses whose turnover is too small to compulsorily register for VAT will either start paying VAT at 20% or take the decision to voluntarily register. Also sellers on certain VAT schemes who are unable to reclaim input VAT will also see their costs rise. It’s important to realise that this isn’t eBay’s fault however (net fees are not changing). VAT is a government mandated charge and for the past 18 months sellers have had a free ride and it’s just that this added Brucie bonus is coming to an end.

What if you’re billed mid month?

If you’re a business seller billed on the 15th of the month, your invoice dated the 15th of August 2017 will show VAT on all your fees. However, you’ll also see a credit for any VAT applied to your fees between the 16th and 31st of July.

  • 11 months ago

    Why are Business sellers, with a basic shop, charged more for a listing then private sellers? I used the fee calculator using the same amount for the article and post cost. Private seller came out at 10.54 pounds (including Vat) Business seller was 11.07, and thats before ebay add the Vat?

  • 11 months ago

    Can i keep my shop but go back to being a private ebay seller instead of buisness

    • 11 months ago

      Can I have a shop, but pretend I’m not a shopkeeper?

      Be honest. If you’ve got a shop, you’re a business. If you sell the odd bits and bobs from around the house that you no longer use, then you’re a private seller.

  • Bryan
    11 months ago

    How can we switch back to private seller. Am not a business but eBay decided I must be 2 years ago as bought some large job lots for my car club.

  • Jules
    11 months ago

    Hi I am registered as a business seller on Ebay [ one of the honest ones ] not like the thousands of so called private sellers who have more than I do on their sites and the items they sell fall into one category ] . I am not VAT registered as my turn over does not go over the VAT fresh hold . After 2 years of real hard graft to get my shop to the position it is in now . I have a good following and am a Top rated Ebay seller . WHY do I have to pay VAT when I am not VAT registered ? It is a price hike I cannot absorb unless I pass it on to my customers – If I do it will render the item I am selling as to expensive and my sales will drop . I lost 2 today because I would not reduce the price far enough [ Wow! and I was going to put everything up by 20% – silly me ! .

    • 11 months ago

      ” WHY do I have to pay VAT when I am not VAT registered ?” – You have answered your own question right there, but don’t even realise it.

      We all pay VAT everyday on all sorts of items without even thinking about it. Ever shopped in B&Q? Poundland? Argos? Everything you bought there, you paid VAT on. Presumably you have internet access and a mobile phone. There is VAT on those too you know.

      As for ebay and VAT, the changes that are happening are bringing things back to the way they should have been in the first place. You should really have been paying VAT all along, just like any of the examples above. You would have been, except eBay had received dispensation in 2015 from HMRC to charge all UK business sellers (VAT registered or otherwise) fees without VAT. It was a 2 year tax bonus for you. And now, predictably perhaps, that has come to an end.

      There’s no point complaining about it because ebay, a company that operates above the VAT threshold and offers services that should be subject to a full 20% VAT rate once it is operating billing from the UK, cannot be exempt. It’s just the same as any other company.