eBay has warned Andy Burnham’s government to ensure that small UK businesses are not ‘unfairly’ penalised by reported plans to make online marketplaces collect VAT on behalf of the retailers that sell through them. The warning, reported by the Manchester Evening News, comes ahead of a Budget expected to include a significant shake-up of how VAT is collected from online sellers.
According to widespread reports, Chancellor John Healey is set to announce that online marketplaces would be required to collect VAT at source from business sellers with an annual turnover above £90,000, regardless of where those sellers are based. The move is expected to raise up to £1 billion, with the proceeds aimed at funding business rates reductions for physical retailers on high streets across the UK. The Budget is due on 28 October 2026.
eBay calls for safeguards on small business growth
Eve Williams, vice-president and general manager at eBay UK, said the company fully backs action against overseas sellers who dodge their tax obligations, but insisted that any changes must not come at the expense of domestic small businesses.
Speaking to the Press Association news agency, Williams said: ‘We strongly support that we ensure overseas sellers meet their legal and tax obligations, because I want to make sure our domestic sellers in the UK get the fairest chance to succeed as well, and that any of these tax changes that are coming in definitely protect small UK businesses.’
Williams said eBay has been in discussions with the Treasury on how to protect growth and avoid small businesses being ‘unfairly’ caught by a tax crackdown. She pointed to VAT thresholds and national insurance thresholds as the sorts of boundaries that can end up discouraging growth rather than encouraging it.
‘Often, it is those really tight kinds of thresholds that inhibit people’s growth,’ she said. She added that the company had been asking the government how to ensure that ‘any online sales taxes that might come in place and any new rules’ do not put people off starting or scaling a business.
‘We want to make sure we’re just continuing to see growth,’ Williams said. ‘The Chancellor’s got a big challenge ahead to make sure they are taxing the right things, to make sure they’ve got the investment in place.’
eBay report flags regional economic gaps
Alongside the public intervention, eBay published a report finding that the potential of small businesses was being held back by ‘persistent productivity gaps and stark regional imbalances’. The report found that in 31 of the 40 areas where eBay small business activity was most concentrated across the UK, gross domestic product per head came in below the national average, with online entrepreneurship developing well beyond the expected economic hotspots.
Williams said ‘hidden’ high streets and small businesses could achieve more growth where they had sufficient confidence and resources, and that small business growth should sit at the heart of the government’s economic strategy.
Among the measures she put forward: increasing the trading allowance, currently set at £1,000 per tax year for income from self-employment, casual services or hiring out personal equipment, to £3,000, which she said would ‘make it easier for people to test their business ideas and start earning money’. Supporting low-value imports into the European Union was also cited as a potential boost for small sellers.
Not everyone in the online retail industry is pushing back on the VAT plan. On 13 October 2026, Reuters, citing The Times, reported that Amazon welcomed the proposal and estimated the change could raise around £700 million for the Treasury. The same report said ministers had looked at plans for a warehouse tax but rejected them, according to The Times. The Treasury declined to comment on the reported plans, saying decisions on tax were a matter for the Chancellor to set out at fiscal events.
Chancellor Healey is due to deliver his Budget on 28 October 2026.
