Selling online into America from Britain: 1099-K forms, platform reporting and what you actually owe

Figures relate to tax year 2025-26 (UK) · 2025 (US)

You sell handmade goods from Sheffield through an American marketplace, and a Form 1099-K arrives. It lists your gross sales in dollars and looks like a tax demand. For most British online sellers, it is nothing of the kind, but it does mean something in your account set-up needs attention.

America rarely taxes a British seller's profits at all. Britain almost always does. So this guide covers what the form is and why the platform sent it. Then it covers how to stop it, and what British platform reporting now tells HMRC about online sellers.

Key takeaways

• Form 1099-K reports payments processed for you by a platform or payment company.
• Platforms issue it to US persons, or to sellers they cannot confirm are foreign.
• A valid W-8BEN usually stops the form being issued to a British seller.
• A British seller with no US business presence generally owes no US income tax on sales profits.
• Britain taxes your trading profit, and platforms now report sellers' income to HMRC.
• The £1,000 trading allowance can cover small side sales, but not a real business.

What is Form 1099-K?

It is an American information return that payment platforms and marketplaces file to report payments they processed for a seller. It shows gross amounts, not profit, so fees, refunds and costs all sit inside the figure. The IRS receives a copy, and so does the seller.

The form exists to catch American sellers who under-report. It was never designed for British online sellers, which is why receiving one usually signals a gap in the account details rather than a real American liability.

Why did a British seller receive one?

Usually because the platform could not confirm you were foreign. Without a valid W-8BEN on file, a platform may treat you as a US person by default. Old accounts opened before you completed the tax interview are the most common cause.

Sometimes the account details are simply wrong. A US address, a US bank account or an American phone number can each push the platform toward treating you as American.

How do you stop the form being issued?

Complete the platform's tax interview as a foreign seller and submit a W-8BEN. That form certifies you are not a US person and are resident in Britain. Most platforms then stop issuing 1099-K forms and stop any backup withholding.

1. Log in to the seller account and find the tax information section.
2. Confirm the account shows a British address and British bank details.
3. Complete the tax interview as an individual or business outside the United States.
4. Submit a W-8BEN, or a W-8BEN-E if you sell through a company.
5. Keep a copy of the submitted form and the confirmation screen.
6. Check next year that no 1099-K arrives and no US tax was withheld.
7. Renew the form before it lapses, usually after about three calendar years.

According to IRS guidance on the form, it expires at the end of the third calendar year after signing unless your circumstances change first. Diarise the renewal, because some platforms do not warn you.

Do you owe US tax on the sales?

Usually not. A British seller with no office, staff or warehouse in America generally has no US trade or business that America can tax. The treaty adds protection by limiting American tax on business profits to a permanent establishment. So Britain taxes the income instead.

Two exceptions deserve a note. Stock held in an American fulfilment warehouse can raise questions about a US presence, and US state sales tax is a separate issue altogether. Our guide to US sales tax for UK sellers covers the state side.

What Britain taxes

Britain taxes your profit. If you sell regularly with a view to profit, that is trading income, reported through Self Assessment with Class 4 National Insurance above the threshold. Allowable costs, platform fees, postage and materials come off first.

The £1,000 trading allowance may cover small, occasional online sellers. That covers gross trading income up to £1,000 a year without needing to report it. Above that, or where you would rather deduct actual costs, the income goes on a return.

What does platform reporting tell HMRC?

More than it used to. From 2024, digital platforms report sellers' income to HMRC under new rules, covering goods, services and lettings. HMRC can match that data against Self Assessment returns, so unreported online income is now far easier to spot.

The rules include thresholds for small sellers, but anyone running a real business should assume HMRC already sees the gross figure. Report it properly and claim the costs that reduce it.

That data flows once a year, after the calendar year ends. So a gap between what the platform reported and what you declared can surface many months later, often with a letter asking you to explain it.

Which online sellers count as trading?

Online sellers who buy to resell, make goods to sell, or sell regularly with a view to profit are usually trading. Someone clearing out their own belongings is usually not. The line turns on pattern, intention and frequency rather than on the platform used.

HMRC looks at several badges of trade. Repeated sales, items bought specifically to sell, and any work to improve goods before selling all point towards trading. A one-off sale of an unwanted sofa points the other way.

Selling personal items at a loss creates no taxable profit at all. But platforms may still report the gross figure, so keep a note explaining what the sales were.

What costs can online sellers deduct?

Platform fees, payment processing charges, postage, packaging, materials and the cost of stock all come off before tax. So do a fair share of home and phone costs where you run the business from home. Keep receipts, because platform reports show gross takings, not your costs.

Currency conversion fees count too. Many platforms convert dollars into pounds before paying you, and the difference appears as a cost on the statement.

Returns and refunds reduce your takings. Record them carefully, because a platform's gross figure may include sales you later refunded in full.

A worked example

The figures below are illustrative. Take an example: a seller in Sheffield takes $48,000 through an American marketplace in 2025, with fees and costs of $19,000. A Form 1099-K arrives showing the full $48,000.

The seller never completed a W-8BEN, so the platform treated them as American. The seller completes the form, keeps a copy, and the 1099-K stops the following year.

In Britain, the profit of roughly $29,000 converts into pounds and goes on Self Assessment as trading income. The seller files no American return, because no American tax is due.

Should online sellers use a limited company?

Sometimes, once profits grow. A company pays corporation tax on its profit, and you then draw salary or dividends. That can reduce tax at higher incomes, but it adds accounts, a company return and more paperwork each year.

The platform forms change too. A company completes a W-8BEN-E rather than a personal W-8BEN. Update the seller account when you incorporate, or the platform may keep reporting you personally.

Most small online sellers stay as sole traders for years. It is worth reviewing the question when profit passes the higher rate threshold, not before.

Do online sellers need a US tax number?

Usually not. A British seller can give a British tax reference on the W-8BEN instead of an American number. Some platforms ask for a US number by default, but the form allows a foreign one for most sellers.

An American number only becomes necessary in narrow cases, such as claiming a refund of tax already withheld. Even then, the process for getting one runs alongside the refund claim.

What if US tax was withheld?

Then you have a recovery problem. Backup withholding at 24% can apply when a platform lacks the right form. Getting it back normally means filing an American return to claim a refund, which takes time and patience.

So fix the form first, before anything else. Stopping future withholding is quick. Recovering past withholding is slow, and small amounts rarely justify the effort.

Then keep the evidence. A copy of the submitted form and the date you filed it will settle most disputes with a platform about what should have happened.

What about Americans selling from Britain?

They are US persons, so the W-8BEN route does not apply to them. An American seller in Britain can expect a 1099-K where platform thresholds are met, and reports the business on an American return as well as on Self Assessment. Credit for British tax then reduces the American bill.

Self-employment tax is the extra trap. Our guide to the certificate of coverage explains how British National Insurance can remove that American charge.

How should online sellers keep records?

Monthly, and from the platform itself. Download the monthly statements, save the fee breakdowns, and keep a simple spreadsheet of stock bought. Match each platform payout to your bank account. That record answers almost every question HMRC might ask.

Keep the W-8BEN confirmation in the same folder. If a 1099-K ever reappears, that confirmation is the first thing the platform will ask to see.

Review the folder once a year before filing. It takes an hour and catches most problems early.

Mistakes and penalties we see with online sellers

• Ignoring the platform's tax interview, then receiving a 1099-K every year.
• Treating the 1099-K figure as profit rather than gross takings.
• Assuming the form means American tax is due, then filing an unnecessary US return.
• Leaving online income off Self Assessment because it arrived in dollars.
• Relying on the trading allowance while running a full business.
• Letting the W-8BEN lapse and triggering backup withholding.

HMRC penalties for undeclared income depend on behaviour, and platform data makes discovery far more likely than before. Correcting earlier years voluntarily costs much less than waiting for HMRC to ask.

What if you sell on several platforms?

Treat each one separately for the tax interview, and together for the tax return. Every platform needs its own W-8BEN. But HMRC sees one business, so all the income and costs go on one Self Assessment return.

Different platforms pay out in different currencies and at different times. So pick one conversion method for the year and apply it to all of them.

How US UK Tax Accountants helps

We sort out the platform forms, stop the American paperwork where it does not belong, and report the profit correctly in Britain. For American sellers here we handle both returns together. If a 1099-K has arrived and you are not sure why, get in touch with a copy, and we will review it alongside our treaty relief work.

Last reviewed 22 September 2026. This article is general information and not personal tax advice. Platform rules and thresholds change, so check your own account before relying on any of it.