Rules and ethics
Part of VAT rules for UK social commerce sellers: registration, rates and records
VAT rules for UK social commerce sellers: registration, rates and records
A UK social seller's guide to VAT on social media sales: the £90,000 registration threshold, rates, distance selling, digital services and HMRC records.
What to take away
- VAT applies to most social commerce sales once taxable turnover for the whole business passes the registration threshold.
- The threshold is £90,000 in any rolling 12 months, according to GOV.UK guidance updated in 2024.
- Standard-rated goods and digital services carry 20% VAT; some children's clothing is zero-rated.
- Distance selling and overseas goods have separate rules, especially for consignments worth £135 or less.
- HMRC expects records that link orders, platform fees and VAT returns.
When VAT registration is triggered
UK businesses must register for VAT when taxable turnover for the previous 12 months exceeds £90,000, or when they expect it to exceed that figure in the next 30 days. Register through GOV.UK VAT registration. Social sellers often cross the threshold through many small orders rather than one large contract. Platform fees and delivery charges need separate treatment, so check each line. The test is based on taxable turnover, not profit.
A simple check:
VAT registration threshold check
- Add gross sales for rolling 12 months
- Remove VAT-exempt items
- Compare total with £90,000 threshold
- Register within 30 days of month end
- Charge VAT from effective registration date
VAT is only one part of the rulebook. The UK compliance guide for social commerce covers consumer law, advertising and creator disclosure alongside tax.
What rate applies to social commerce sales
VAT rates are set by HMRC: standard 20%, reduced 5% and zero 0%. See VAT rates for the full list. Most clothing, electronics and cosmetics sold through TikTok Shop or Instagram are standard-rated. Children's clothing and most food are zero-rated. Paid live shopping events and downloadable guides are usually standard-rated digital services.
VAT rates by sale type
Sale type
- Physical goods to UK consumer
- Standard rate, 20%
- Children's clothing
- Zero rate, 0%
- Digital service, paid stream
- Standard rate, 20%
- Overseas goods £135 or less
- Marketplace may account
VAT treatment
- Physical goods to UK consumer
- Children's clothing
- Digital service, paid stream
- Overseas goods £135 or less
Check the rate before you set a price. A £30.00 sale with VAT at 20% leaves £25.00 before VAT. That worked example is illustrative only.
Distance selling and overseas goods
Distance selling means selling goods to customers without face-to-face contact. For goods arriving from outside the UK, HMRC guidance explains who accounts for VAT on consignments worth £135 or less. See VAT and overseas goods sold directly to customers in the UK. Online marketplaces often become the deemed supplier. Sellers using a UK warehouse still track where the goods were at the point of sale.
If a platform holds the money, the payment gateways compared article sets out who controls payouts and when VAT evidence reaches you.
Digital services, commissions and creators
Digital services supplied to UK consumers are generally standard-rated. That includes paid memberships, downloadable templates and access to a private live stream. Creator commissions are a business cost, not a VAT charge. The creator may still need to add VAT to their invoice if they are registered. Keep platform fees and creator fees in separate ledger lines.
HMRC expects VAT invoices for business-to-business sales. Consumer sales can appear on a simplified invoice. Platform fees are usually shown as a separate charge, not as VAT on your sale. Check whether the fee includes VAT before you claim it.
Records HMRC expects from a social seller
HMRC expects a clear audit trail from order to return. Download settlement reports each month. Reconcile gross sales against your bank account. Keep a running total of taxable turnover so the threshold does not arrive as a surprise. Label each refund with the original order number. Store records for six years.
A practical checklist:
Records HMRC expects
- VAT registration certificate and effective date
- Monthly platform settlement reports
- Bank statements that match payouts
- Credit notes for refunds and cancellations
- Import VAT evidence for overseas stock
Common questions
Do I charge VAT on TikTok Shop sales?
Yes, if you are VAT-registered and the goods are standard-rated. TikTok Shop collects payment from the buyer, but you remain responsible for the VAT return.
What is the distance selling VAT threshold for UK sellers?
The £90,000 registration threshold applies to taxable turnover overall, not only distance sales. There is no separate lower threshold for online-only sellers.
Are digital services sold through social media standard-rated?
Most are standard-rated at 20%. Some education and healthcare supplies are exempt, so check the nature of the service.
Can I reclaim VAT on social media ads?
Yes, if the ads support your taxable business and you hold a valid VAT invoice. Ads for exempt supplies are treated differently.
