Amazon Tax for Online Retailers: UK Budget Could Raise £1.5bn Retail Levy

The UK Treasury is planning an increase in business rates on large distribution warehouses used by online retailers such as Amazon as part of the Autumn Budget 2026. According to a Bloomberg Tax report from 1 November 2024, the measure is intended to benefit smaller retail businesses through lower tax rates and could generate £1.5 billion in government revenue.

Budget Speech on 28 October 2026

Chancellor John Healey MP will present the Autumn Budget on Wednesday, 28 October 2026. At the same time, the Office for Budget Responsibility will publish an accompanying report. The timing falls roughly four weeks before Black Friday, during a period when online retailers have already planned inventory levels, advertising budgets and seasonal staff.

The planned tax increase on warehouses is part of a broader strategy to redistribute the tax burden between online commerce and physical retail. Smaller shops in city centres traditionally pay higher business rates per square metre than large logistics centres outside cities, creating a structural disadvantage for bricks-and-mortar retail.

Further Tax Reforms for Online Sellers

In addition to the warehouse tax, further changes are planned. The customs exemption for low-value imports up to £135 has already been abolished – this is settled policy and no longer a proposal. The regulation mainly affected inexpensive goods from abroad that previously entered the country duty-free.

The Treasury also plans a consultation on VAT liability for marketplace sales by UK businesses. This reform could potentially change payouts to sellers, though details are still to be determined.

Data Reporting Requirements Already in Force

Since 1 January 2024, digital platforms such as eBay, Etsy, Vinted, Amazon and Airbnb must report seller data to the UK tax authority HMRC. The reporting requirement applies when sellers reach approximately £1,700 in turnover (roughly €2,000) or at least 30 sales in a calendar year. Data for 2025 was submitted to HMRC by 31 January 2026, and sellers received a copy.

The measure aims to make tax evasion in online retail more difficult. HMRC can now systematically check whether sellers correctly declare their income.

Amazon-Specific Adjustments

Amazon itself made changes to VAT calculation in June 2026, which require adjustments to the accounting of online retailers. The changes affect how the platform calculates and reports VAT on transactions.

For Amazon FBA sellers (Fulfillment by Amazon) – a model in which Amazon handles storage, shipping and customer service – special income tax obligations apply to all profits from online retail. The UK VAT system has three rates: 20 per cent standard rate, 5 per cent reduced rate and 0 per cent zero rate.

Planning for 2027 Recommended

Tax advisers recommend that online sellers do not wait for the budget speech to plan the fourth quarter of 2026. Most rate changes apply from the beginning of the tax year, not from the announcement date. The practical focus should be on planning for 2027, as the budget decisions mainly affect the next tax year.

For retailers exporting via Amazon EFN (European Fulfillment Network), uncertainties can arise regarding value thresholds and customs responsibility. Amazon sometimes rejects the seller's tax obligation and states that the customer, as the importer, bears customs responsibility.