VAT for Whatnot Sellers: Do You Need to Register?

If you sell through Whatnot, VAT becomes important once your sales start growing. The rules apply whether you sell trading cards, sneakers, comics, collectibles, vintage clothing, toys, beauty products or anything else through live auctions and marketplace sales.

This guide explains when Whatnot sellers need to register for VAT, when voluntary registration might make sense, how the Flat Rate Scheme works, and why second-hand goods can make VAT more complicated than it first looks.

The £90,000 VAT Threshold

In the UK, you must register for VAT if your taxable turnover is more than £90,000. This is measured over a rolling 12-month period, not just your accounting year or tax year.

HMRC explains the current threshold on its VAT thresholds page. The important point is that you need to keep checking your turnover as you go, especially if your Whatnot sales spike during busy drops, live shows or seasonal periods.

What counts towards the threshold?

• Sales made through Whatnot live shows and auctions.
• Marketplace or private sales connected to your selling business.
• Sales on other platforms such as eBay, Amazon, Etsy, Vinted or Shopify.
• Sales from your own website or social channels.
• Other taxable business income from the same trade.

What does not usually count?

• Employment income from a job.
• Genuinely separate non-business income.
• Exempt income, if any applies.

When Do You Need to Register?

If your taxable turnover goes over £90,000 in any rolling 12-month period, you normally need to register within 30 days of the end of the month in which you crossed the threshold. Your effective date of registration is usually the first day of the second month after you went over.

You also need to register if you expect your taxable turnover to go over the threshold in the next 30 days alone. That can happen if you have a major stock release, live event or confirmed bulk order coming up.

Missing the VAT deadline can create a painful result: you may owe VAT from the date you should have been registered, even if you did not charge your customers VAT at the time.

Should You Register for VAT Voluntarily?

You can register for VAT before you hit the threshold. For some Whatnot sellers, this is sensible. For others, it can squeeze margins and add admin without much benefit.

The Consumer Pricing Problem

Most Whatnot sellers sell to consumers. Consumers cannot reclaim VAT, so VAT registration creates a commercial decision:

• You increase prices to cover VAT, which may make you less competitive.
• You keep prices the same and absorb VAT, which reduces your margin.
• You adjust sourcing, pricing and shipping so the business still works after VAT.

For a reseller, VAT can change the numbers quickly. A product that looked profitable before registration can become much tighter once VAT is included.

Standard VAT Accounting

Under standard VAT accounting, you charge VAT on your taxable sales and reclaim VAT on eligible business purchases. You then pay HMRC the difference through your VAT return.

This can work well if you buy from VAT-registered suppliers and have proper VAT invoices. It works less well if your stock comes mainly from private individuals, charity shops, car boot sales or other non-VAT-registered sellers, because there may be no input VAT to reclaim.

The Flat Rate Scheme

The VAT Flat Rate Scheme is designed to simplify VAT for small businesses. You can usually join if your VAT turnover is £150,000 or less, excluding VAT.

Instead of working out VAT on every sale and purchase in the normal way, you pay HMRC a fixed percentage of your VAT-inclusive turnover. For “retailing not listed elsewhere”, the flat rate is currently 7.5%. You also get a 1% discount in your first year of VAT registration, provided you qualify.

Example

• You have VAT-inclusive sales of £10,000.
• Your flat rate is 7.5%.
• You pay HMRC £750.
• In the first year, the 1% discount may reduce the rate to 6.5%.

HMRC lists the flat rates and first-year discount on its Flat Rate Scheme rates page.

The catch

Under the Flat Rate Scheme, you generally cannot reclaim VAT on purchases, except for certain capital assets over £2,000. That means the scheme is not automatically cheaper, especially if you buy a lot of VATable stock.

Second-Hand Goods and the Margin Scheme

This is the part many reseller guides miss. If you sell second-hand goods, collectibles, antiques or similar items, the VAT margin scheme may be more relevant than the Flat Rate Scheme.

Under a margin scheme, VAT is calculated on the profit margin rather than the full selling price, provided the goods and records qualify. That can be much better for resellers who buy from private individuals where no VAT invoice exists.

However, margin schemes have strict record-keeping rules, and the Flat Rate Scheme can be of limited value where second-hand margin schemes are a big part of the business. HMRC's Flat Rate Scheme notice specifically warns that second-hand margin scheme sellers need to be careful.

What Changes After VAT Registration?

Pricing

You need to decide whether your displayed prices are VAT-inclusive and how VAT affects your margins. For consumer-facing sellers, VAT is often absorbed into the selling price rather than added on visibly at checkout.

Record-keeping

You must keep proper VAT records, including sales, purchases, VAT charged, VAT reclaimed, invoices and scheme calculations. If you use the Flat Rate Scheme, you still need records showing your flat rate turnover, percentage used and VAT due.

Quarterly VAT returns

Most VAT-registered businesses file VAT returns every quarter. The return tells HMRC how much VAT you owe or can reclaim for that period.

Making Tax Digital

All VAT-registered businesses must keep digital VAT records and submit VAT returns using compatible software. HMRC explains this in its Making Tax Digital for VAT guidance.

For Whatnot sellers, that usually means using software such as Xero, QuickBooks or similar, with clean bookkeeping behind the scenes.

Common VAT Mistakes Whatnot Sellers Make

• Checking turnover once a year instead of on a rolling 12-month basis.
• Thinking the threshold is based on profit rather than sales.
• Ignoring sales from other platforms when checking the VAT threshold.
• Registering late and having to fund VAT from past sales.
• Choosing the Flat Rate Scheme without comparing it to standard VAT or margin schemes.
• Not keeping purchase records for second-hand stock.
• Forgetting that VAT registration affects pricing, cash flow and margins.

Should Whatnot Sellers Register Early?

Voluntary VAT registration may be worth considering if:

• You buy significant stock from VAT-registered suppliers.
• You are already near £70,000 to £80,000 and growing quickly.
• You want to reclaim VAT on setup costs or equipment.
• You sell mainly to businesses that can reclaim VAT.
• You want everything ready before registration becomes mandatory.

It may be better to wait if:

• Your customers are mostly consumers.
• Your stock is bought from private sellers or non-VAT-registered sources.
• You sell mainly second-hand goods and need margin scheme advice.
• Your turnover is well below the threshold.
• Your margins cannot absorb VAT yet.

Need Help With VAT?

VAT can feel overwhelming when you are trying to grow your Whatnot business. At Simplr Accounting, we help Whatnot sellers monitor the VAT threshold, choose the right VAT scheme, set up cloud bookkeeping and file VAT returns through Making Tax Digital.

See our accountant for Whatnot sellers page or book a free discovery call to talk through your numbers.