UK Tax Changes: What’s Changing & What Amazon Sellers Should Watch

UK Tax Changes Every Amazon Seller Should Be Watching in 2025–2026

The UK tax landscape is shifting quickly, and Amazon sellers — especially those importing products or operating through online marketplaces — will feel the impact over the next 12–24 months. Several new reforms are aimed at levelling the playing field between UK sellers and low-cost overseas competitors, improving VAT compliance, and reshaping how duties are charged on goods entering the UK.

Below is a breakdown of the most important tax changes and what they mean for Amazon sellers.

1. The £135 “De Minimis” Import Duty Exemption Is Being Phased Out

For years, imported goods valued under £135 were exempt from customs duty when entering the UK. This meant many sellers — especially overseas sellers — could ship low-value products into the country with minimal tax burden.

That system is changing.

The UK government has announced plans to abolish this threshold entirely. Once removed, all imported goods, even low-value items, may be subject to customs duty.

What this means for Amazon sellers:

• Importing low-cost products will become more expensive.

• Landed costs will rise, and margins will shrink unless prices are adjusted.

• The change reduces the advantage overseas sellers previously held — potentially benefiting UK-based sellers.

• Sellers sourcing from China, Turkey, the US, or the EU need to revisit their cost modelling urgently.

2. Ongoing VAT Reforms Impacting Online Marketplaces

The UK is continuing to tighten VAT rules around online marketplaces to prevent tax fraud and ensure fair competition. One proposal gaining traction is the expansion of “deemed reseller” rules, where platforms like Amazon could become responsible for collecting and remitting VAT on third-party seller transactions.

If adopted, this would fundamentally change how VAT is handled on Amazon.

What this means for Amazon sellers:

• Marketplaces may take on more VAT responsibility, reducing the administrative burden for some sellers.

• Overseas sellers may lose loopholes previously used to avoid VAT obligations.

• UK sellers could see a more level competitive environment as non-compliant sellers are removed or forced to comply.

• VAT accuracy, correct categorisation, and compliance will become more important than ever.

3. Adjustments to Business Tax Regimes & Allowances

The UK is reviewing and updating several business-tax provisions that may affect small e-commerce companies. These include changes in areas such as:

• Relief on business asset disposal

• Allowances for equipment or capital goods

• Administrative simplifications for certain business categories

• Refinements in corporation tax reporting and thresholds

While many of these changes are aimed at simplifying compliance, they may also alter long-term tax planning and allowable deductions for Amazon sellers.

What this means for Amazon sellers:

• Your accountant may advise updated strategies regarding profit extraction, investments, and business purchases.

• Some reliefs may be reduced, affecting long-term planning when selling a business or reorganising assets.

• It’s essential to stay updated on which expenses remain deductible and how allowances may shift each tax year.

How Amazon Sellers Should Prepare Now

To stay ahead of these changes, sellers should take proactive steps:

1. Review sourcing and landed-cost calculations

Expect duty to apply on many more products. Recalculate:

• Product cost

• Duty

• VAT

• Shipping

• Amazon fees

• Profit margins

Small changes can dramatically shift profitability.

2. Update your pricing strategy

If margins shrink due to new duties or VAT adjustments:

• Consider reasonable price increases

• Improve product positioning

• Enhance perceived value

• Introduce bundles or multi-pack strategies

3. Tighten VAT compliance

Make sure:

• VAT filings are correct

• Product tax codes are accurate

• You’re prepared for possible marketplace-handled VAT changes

• You keep clean records for audits or system shifts

4. Reassess product mix

Low-cost, low-margin items may become unprofitable.Shift focus to:

• Higher-margin SKUs

• Domestically sourced products

• Private-label items with stronger branding power

5. Analyse long-term financial planning

Tax changes affect:

• Profit extraction

• Business valuation

• Exit strategy

• Cash flow

• Accounting requirements

A quick tax audit with your accountant could prevent costly surprises.

Final Thoughts

The UK tax system is moving toward greater fairness, tighter marketplace oversight, and increased duty on imports, especially low-value goods. For Amazon sellers, this means rising costs — but also reduced competition from non-compliant importers.

The sellers who adapt fastest, optimise costs, and maintain strong compliance will be the ones who thrive in this new environment.

If you want, I can also create:✅ A graphic version of this blog✅ A short social media summarised post✅ A checklist or calculator for import duty and VAT impact

Just a quick note — we’re not tax advisers or accountants. Everything shared here is simply to help raise awareness and give Amazon sellers a clearer picture of what’s happening. Tax rules can be complicated and change often, so if you’re making financial decisions for your business, it’s always best to speak with a qualified tax professional.