The VAT on fees will be 20% or £20,000 annually which works out to £5,000 a quarter or £1,666 per month. If your annual sales on eBay are a million quid then at 10% fees you’ll be paying £100,000 a year to eBay. It’s important to remember that the VAT is paid on your eBay fees not your turnover, so whilst 20% VAT might sound scary in reality it’s relatively small amounts. You will need to examine your margins but typically for sellers in categories where fees are 10% the increase is equivalent to paying 12% in the future (although you’ll have the dubious comfort of knowing that the additional 2% goes towards running the country). Those sellers who are unable to reclaim VAT either because they’re not VAT registered or if they are on a VAT scheme where they are unable to reclaim VAT will see a cost increase in real terms. However moving forwards it may cause a slight cash flow issue as the VAT will be paid to eBay monthly and reclaimed from your VAT quarterly so be sure to update your cash forecasts. Your next eBay invoice will be 20% higher than normal but if you are VAT registered then you will be able to reclaim the VAT on your next quarterly VAT return, which for some may be in as little as a month but for others it could be three months time depending on when your quarterly VAT return is due. The first people to see the change will be those billed in the middle of the month, other sellers will see the change when they receive their invoices at the end of August. It’s worth a quick reminder that from the 1st of August eBay are now applying VAT to their fees which business sellers will pay for the first time.
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