Big Tax changes for Self Employed Marketplace Sellers

With the budget announced today, there are two changes that will significantly impact sole traders selling on marketplaces. Self employed marketplace sellers will want to be aware of changes to how they pay their Income Tax from April 2029, and also changes to VAT on marketplace.

You can read the full budget statement and budget document online, there are lots of relatively small measures (like ending standing charges on your domestic gas bill!) , but here are the changes that will impact self employed marketplace sellers cash flow as well as level the playing field.

Self employed Income Tax From April 2029, taxpayers who already make Payments on Account will make smaller, more regular contributions towards their tax bill throughout the year, bringing payment closer to when income is earned.

This will help taxpayers budget and plan for their tax obligations, reducing the risk of large, unexpected tax bills and making it less likely that they fall behind on tax due and build up debt.

– Budget 2026 document I’ve lost count of the number of times I’ve heard someone in July or January saying that they don’t have the cash on hand to pay their self assessment tax return and are phoning HMRC to put a payment plan in place. In effect what this budget does is to put a payment plan in place for everyone.

Sounds sensible, but what this actually means is that if you’re paying your income tax bill monthly or quarterly, it’s going to suck funds out of your bank account which you’d previously have had available in August and September to invest in stock for Q4.

Hardly anyone in retail has a problem paying the bills in January because the golden quarter has just finished when you’ve maximised on sales over the Black Friday and Christmas periods. Start planning now for 2029 when your tax will start being collected earlier than you are accustomed to!

It’ll be small comfort in January 2030 when you don’t have a big bill to pay but do have your tax direct debits coming out in February and March and can’t pay them either because you didn’t invest back in the summer.

This will in effect be a one off change, but sucking funds out of a small business is never a great idea and if you typically buy your stock late summer or early Autumn you’ll want to ensure it’s not already in the tax man’s bank account!

Trading Allowance Increase To support entrepreneurs to take the first steps in starting a small business, the government is also tripling the generosity of the Trading Allowance from £1,000 to £3,000 from 6 April 2027.

– Budget 2026 document The government will increase the Trading Allowance from £1,000 to £3,000, allowing individuals to receive up to £3,000 of trading and miscellaneous income tax-free each year. This will take effect from 6 April 2027 and is a welcome measure for those wanting to start a business.

Frankly £1000 of sales is nothing these days, and the increase will give a more realistic chance of testing the waters before you register as a business. You’ll still want to keep records however – as soon as you exceed £3000 of sales you’ll want to also claim your allowable expenses when you complete your first tax return.

Online Marketplace VAT Collection In 2021, reforms were introduced to ensure that overseas sellers on online marketplaces pay the tax they owe. This was a step towards protecting the high street from unfair competition from overseas businesses.

The government is now going further to tackle the non-compliance by UK sellers trading on online marketplaces that undercuts businesses on the high street who pay the tax they owe.

The government will do this by making the marketplaces responsible for collecting VAT on sales by UK businesses, where those businesses are making more than £90,000 of sales through the marketplace. This policy will be implemented from October 2027 and will not impact personal sales through marketplaces.

The money raised from this policy will be reinvested into the high street through reductions to business rates.

– Budget 2026 document A big yippee and thumbing the nose to every overseas company that’s masqueraded as a UK entity, traded for 6 months and then let the business go bust rather than pay the VAT bill… Often to just pop up with a brand new company to do it all over again. It’s unfair competition and UK retailers will welcome a level playing field.

Overseas sellers already have VAT collected by the marketplaces and now that will be coming to UK sellers as well. Trade more than £90k on a marketplace and from October 2027 the marketplace will start collecting the VAT for you. Things we don’t know is how this will impact those on special VAT schemes – I’m thinking specifically the Flat Rate VAT scheme.

The Budget Document says that ‘”‘Online marketplaces will be responsible for collecting VAT on sales by UK VAT-registered businesses and any other UK business with a minimum annual sales threshold per platform of £90,000’, but specifically excludes ‘non-business (i. e. personal) s