"We're a UK supplement brand doing about £1.2m a year on TikTok Shop, mostly capsules, protein powders and a couple of drink mixes. Our old accountant told us supplements are VAT free. Our new bookkeeper says that is wrong. What are the traps we should be checking?" Here is the straight answer. There is no blanket VAT exemption for supplements. HMRC's food notice lists vitamin and mineral supplements of all kinds as standard rated. Some products that qualify as food can be zero rated if no statutory exception applies. The sports drink exception applies where the product is a sports drink or similar drink and meets the statutory advertising or marketing test. It can include powders, syrups and concentrates used to prepare those drinks. On the illustrative example below, a £1.2m brand with a mixed catalogue carries about £140,000 of output VAT a year on its standard rated lines. That gap between assumption and reality is the first trap. There are six.
I spend my days looking at settlement reports, fee statements and VAT returns for social commerce brands, and this is the area where I see the most expensive assumptions. None of the numbers below are client numbers. They are all illustrative examples, worked so you can rerun them with your own.
Here's the Short Version
- There is no blanket "supplements are VAT free" rule. HMRC lists vitamin and mineral supplements of all kinds as standard rated. A product can be zero rated only if it is food of a kind used for human consumption and no statutory exception applies. Product use and presentation matter, and some exceptions also depend on advertising or marketing
- The £90,000 registration threshold counts zero rated sales too, so a viral month can take you over even if your own VAT bill would be nil
- Your TikTok payouts are not your turnover. Output VAT is based on the VAT inclusive consideration for the sale, which can include qualifying third party payments, not the net payout, and the VAT charged on the commission is normally recoverable if you are registered and hold the fee invoices
- The 9% commission is inclusive of VAT. On the illustrative numbers, that is about £18,000 a year of recoverable VAT for a £1.2m brand, before ads, fulfilment and imports
- Import VAT normally follows the UK rate for the goods: 20% on standard rated goods, nothing on zero rated ones, and postponed VAT accounting, which needs no prior approval, keeps it off the cash flow when the business is UK VAT registered and meets the conditions
- If the liability has been wrong, use the error correction rules. Net errors up to £10,000 can go on the next return, some up to £50,000 can too, and larger or deliberate errors need a separate notification. The normal window is four years, and it does not apply to deliberate errors
- The pricing maths change with the liability. The VAT inside a standard rated £30 sticker is £5, not £6, and getting that wrong eats your margin
Trap 1: The "Supplements Are VAT Free" Assumption
The belief comes from a sensible place. Supplements are edible, most food is zero rated, so brands assume the shelf price is their money. HMRC's food products notice says otherwise, and it is worth reading the exact wording: "dietary supplements of a kind not normally purchased and used as food are standard rated". The list that follows includes vitamin and mineral supplements of all kinds, royal jelly products, tablets, pills and capsules containing things like wheatgerm, iron, calcium, fibre, yeast, garlic, ginseng, pollen, propolis, seaweed, evening primrose or guarana, cod liver oil and fish oils held out as supplements, and elixirs and tonics.
Where the zero rating lives is in products that genuinely qualify as food. HMRC's internal manual says a powdered supplement can be zero rated if it has nutritional content and/or provides a significant dietary requirement, is consumed in a manner commonly associated with food, and is not otherwise standard rated, including as a preparation for making a beverage. A 2025 tribunal decision, Global By Nature, applied that thinking to vegan protein powders and found they were not "sports drinks", so they kept their zero rating. One health warning: in early 2026, HMRC was refused permission to appeal that decision. The First-tier Tribunal ruling therefore stands for the Sunwarrior products, but each powder still needs its own review of composition, use and marketing.
The other side of the boundary is sharper. Since 1 October 2012, drinks that are "advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk" are standard rated, and that includes powders, syrups and concentrates for making them, whey included. The statutory exception requires both a sports drink or similar drink and the specified advertising or marketing. Global By Nature held that a powder is not caught merely because its marketing refers to performance, recovery or bulk. Product composition, use and marketing all matter, and each SKU has to be assessed on its facts. Herbal sleep capsules and a vanilla protein shake can sit in the same catalogue on completely different VAT treatments. This is the table I use to sort a range.
| Product | HMRC treatment | The trigger |
|---|---|---|
| Vitamin and mineral supplements (capsules, tablets, softgels) | Standard rated, 20% | Named on HMRC's food notice list |
| Herbal capsules and tablets (ginseng, evening primrose, propolis, seaweed and similar) | Standard rated, 20% | Same list |
| Cod liver oil and fish oils held out as dietary supplements | Standard rated, 20% | Same list |
| Items made up wholly or mainly of creatine | Standard rated, 20% | HMRC Notice 701/14 section 4.6.4 |
| Sports drinks, and the powders, syrups or concentrates made up into them | Standard rated, 20% | Sports drinks rule since 1 October 2012, whey included |
| Sports tablets | Standard rated, 20% | Glucose, dextrose and Horlicks tablets excepted |
| Powdered supplements with nutritional content and/or a significant dietary role, consumed in a manner associated with food | Can be zero rated if they qualify as food and are not otherwise standard rated | Apply HMRC VFOOD2020 and review composition, use and marketing |
| Slimmers' meal replacement products, including drinks | Zero rated unless supplied in a confectionery form | HMRC Notice 701/14 section 4.5 |
| Foods designed to meet the nutritional needs of people made weak or disabled by illness or injury | Can be zero rated, subject to the normal rules, if they meet nutritional needs rather than treat a medical condition | HMRC Notice 701/14 section 4.3 |
So the first action is not a VAT return fix, it is a catalogue review. Every SKU gets a liability decision with a source note next to it, product by product, and your marketing copy gets checked against the same test. Get the line wrong in one direction and you may under declare VAT that HMRC can assess, with interest and possible penalties. Get it wrong in the other direction and you may be able to correct overdeclared VAT within the applicable time limit, but HMRC can refuse a repayment that would unjustly enrich you unless the customer reimbursement rules are met. Neither direction fixes itself.
Trap 2: Watching Revenue but Not Taxable Turnover
The registration threshold is £90,000. The part most founders miss: taxable turnover includes zero rated sales. Even if every capsule you sell were VAT free, the revenue still counts towards the number that forces you to register. A viral run does not care about your finances. One good fortnight can add enough takings to tip a rolling twelve month total over the line.
Two clocks matter when you cross. If your rolling twelve month total goes over £90,000, you must register within 30 days of the end of that month, and your effective date of registration is the first day of the second month after the crossing. If you realise you are going to exceed £90,000 in the next 30 days alone, you must register it by the end of that period, and your effective date is the date you realised, not the date the money lands.
An illustrative example of the first clock: you have been running at £25,000 a month, a video lands, and the rolling total crosses £90,000 during September. You must register by 30 October, and your effective date is 1 November. From 1 November, VAT is due on your sales even if you are still waiting for the number and never added anything to your prices. The tax comes out of the price you charged.
Miss the deadline and there is more than the VAT. You account for tax from the effective date anyway, and the failure to notify penalty can run up to 30% of the VAT due where the failure was not deliberate, with higher ranges if it was. The fix is boring and cheap: put the rolling twelve month total on a dashboard, not in a drawer. Our free VAT registration checker runs your numbers against the threshold, marketplace sales included.
One more option exists for the mostly zero rated. If almost everything you sell is zero rated, you can apply to HMRC for an exemption from registration instead of registering. HMRC has to agree, and if it does, you give up input VAT recovery, including the VAT on your TikTok fees and ads. Run both outcomes before choosing.
Trap 3: Treating Payouts as Sales (and Ignoring the VAT in Fees)
This one is a bookkeeping habit before it is a tax problem. TikTok pays you net of commission, refunds and adjustments, and plenty of brands simply post the bank receipt as revenue. Once that happens, two things go wrong at once. Your books understate the VAT inclusive consideration for the sale, which can include qualifying amounts paid by TikTok or another third party as well as the customer's payment. Output VAT is calculated on that consideration, not the net settlement. And if the fees and their supporting invoices are not recorded either, any recoverable input VAT on them may be missed too.
The commission maths matters here. TikTok's UK seller pages say the commission rate is "inclusive of applicable taxes, including but not limited to Value Added Tax", at a standard 9% charged on net sales plus customer paid shipping plus platform discounts, less refunds, with selected categories and incentives able to reduce it. Inclusive of VAT means one sixth of the fee is VAT. For a £1.2m brand paying roughly £108,000 of commission across the year, that is about £18,000 of recoverable VAT, or about £1,500 a month back into the business for booking the fees properly. If an order is returned in full, TikTok refunds the whole commission, so the fees and the VAT on them unwind as refunds land. The full fee stack, beyond commission, is broken down in our post on TikTok Shop fees for a supplement brand.
While we are here, kill one myth. TikTok Shop does not account for VAT on your sales if you are a UK established seller selling goods held in the UK. You do. Marketplace deemed supplier rules can apply to qualifying consumer sales of UK located goods by sellers not established in the UK. They can also apply where goods are outside the UK at the point of sale and imported in consignments worth £135 or less, regardless of where the seller is established. That is why it matters which side of the rule you are on. We went through the marketplace version of this in our post on marketplace VAT at £1M.
Here is the whole year in one table, illustrative numbers for a £1.2m TikTok Shop brand with a 70/30 standard to zero rated mix.
| The year, illustrative example | Amount | VAT |
|---|---|---|
| Standard rated customer takings | £840,000 | £140,000 due (one sixth) |
| Zero rated customer takings | £360,000 | Nil |
| TikTok commission on those sales (about 9%, VAT inclusive) | £108,000 | £18,000 recoverable |
| Net position before VAT on ads, stock and other costs | £1,200,000 of takings | About £122,000 due |
Read the bottom line like a founder: the standard rated 70% of your catalogue carries six figures of VAT a year that the zero rated 30% does not, and the fee stack quietly hands back around £18,000 of it. Both facts belong in your pricing and your cash flow. If your bookkeeper is posting payouts as sales, neither fact is visible to you.
Trap 4: Leaving Input VAT and Import VAT on the Table
The VAT you reclaim tends to get less attention than the VAT you pay, but on a fast growing brand it adds up quickly. If you are registered, the recoverable list includes the VAT inside TikTok's commission, VAT on ad spend (for most brands we work with, the biggest recoverable cost of the lot), fulfilment and 3PL charges, packaging, software and professional fees. All of it runs on the normal rules: the cost has to relate to your taxable business activities, the VAT has to be correctly charged, and you need the right invoices or import evidence. The catch is documentation: if the fee invoices stay in Seller Center and only the net payouts hit your books, the reclaim never happens. The monthly version of this discipline is in our TikTok Shop VAT checklist.
Then there is the import side. Import VAT is normally charged at the rate that would apply to a UK supply. Standard rated products are charged at 20% of the import VAT value. That value is based on the customs value plus relevant incidental expenses, Customs Duty and other import charges. No import VAT is chargeable on goods that are zero rated in the UK. If you bring in standard rated stock, postponed VAT accounting lets you account for import VAT on the same VAT return instead of paying it upfront, and recover it on that return where full input tax recovery is available. No approval is needed. The business must be UK VAT registered, the goods must be for its business and it must have the right to dispose of them. Include the VAT registration number on the import declaration, and if someone imports on your behalf, instruct them in writing before they submit it. VAT is recorded against your EORI number, and you should review the monthly postponed import VAT statements. If your stock comes in from China, the landed cost mechanics sit in our import post.
One rescue worth knowing if you have just crossed the threshold or registered late: VAT you paid before registration is not automatically lost. VAT on goods supplied no more than four years before the business was registered, or was required to be registered, can qualify if the goods are still held or were used to make other goods still held. You need a stock account and acceptable evidence. You cannot claim VAT on goods completely used up before registration, and you must reduce the claim on resale stock for stock sold before registration. VAT on services supplied no more than six months before registration can qualify if the services meet HMRC's separate conditions and relate to the registered business's taxable activities.
Trap 5: Fixing a VAT Mistake the Slow Way
If you have been treating standard rated products as zero rated, you will need to correct it, and the route depends on size. Net errors of £10,000 or less can go on your next VAT return. So can errors between £10,000 and £50,000 if they are no more than 1% of the Box 6 figure on the return where you discover them. Everything else needs a separate notification to HMRC, through the online service or in writing: that means net errors above the higher limits and any deliberate error of any size. Form VAT652 can no longer be used, so do not wait for one to appear. If you cannot use the online service, send the information to the VAT Error Correction Team.
Two things make speed worthwhile. The normal correction time limit is four years, and it does not apply to deliberate errors. The further back you go, the more records have gone cold. And late paid VAT carries interest from its original due date, currently Bank Rate plus four percentage points. A correction done promptly, with the working shown, is a much smaller event than an assessment that arrives after a review letter. If the misclassification was careless rather than deliberate, how you disclose drives how it lands. If it was deliberate, talk to a specialist before you touch anything.
Trap 6: The Pricing Maths You Have to Redo
Liability determines what the sticker actually contains, and founders routinely get the arithmetic backwards. Consumer prices are VAT inclusive, so the VAT inside a standard rated sale is one sixth of the price, not 20% of it. On a £30 product, the VAT is £5, and you keep £25. The common error is taking 20% of the sticker, which gives £6 and overstates the VAT by £1 in every £30. That pound was your margin.
| Price on the sticker | VAT inside | You keep |
|---|---|---|
| Standard rated product at £30 | £5.00 (one sixth) | £25.00 |
| Zero rated product at £30 | £0.00 | £30.00 |
Run that difference across a catalogue. Every standard rated line priced "like the zero rated ones" is quieter and thinner than the plan. Some brands reprice to protect the net, some accept the margin for the sales velocity, and both can be right, but you cannot make that call while you believe supplements are VAT free.
FAQ
Do UK supplement brands have to charge VAT on TikTok Shop sales?
It depends on the product. HMRC lists vitamin and mineral supplements of all kinds as standard rated. Sports drinks and similar drinks that meet both the product and marketing tests are also standard rated, including powders used to prepare them. Products that qualify as food and do not fall within an exception can be zero rated. In this post's illustrative £1.2 million example, where 70% of customer takings are standard rated, the output VAT on those lines is £140,000 a year.
We sell mostly zero rated supplements. Do we still need to register for VAT?
Watch the £90,000 rolling twelve month taxable turnover, because zero rated sales count towards it. Cross the line and you must register within 30 days of that month's end, with the effective date the first day of the second month after the crossing. If almost everything you sell is zero rated, you can ask HMRC for an exemption from registration instead, but you then give up input VAT recovery on fees, ads and imports.
Can we reclaim the VAT on TikTok Shop's commission and our ad spend?
If you are VAT registered, you can normally recover the VAT correctly charged on TikTok commission and other costs that relate to your taxable business activities. TikTok's standard 9% commission is VAT inclusive, so the VAT element is one sixth of the charge. VAT on ads, fulfilment, packaging and imports may also be recoverable, subject to the normal rules and the correct VAT invoices or import evidence. Overseas services may require reverse charge accounting instead.
The Bottom Line
VAT for a supplement brand is not one rule, it is a product by product review, and on TikTok Shop it touches everything: the price on the sticker, the payout in the bank, the fees you are charged, and the stock you import. Get the classification right against HMRC's current list, watch the rolling threshold whether or not your sales are zero rated, recover what you are owed, and fix mistakes while they are small and cheap. Do that and VAT stops being the surprise and becomes just another line you control.
If you want your catalogue, payouts and VAT position mapped properly, that is the work we do every week for UK supplement brands between £1m and £20m. We are specialist social commerce accountants, and we will tell you plainly where your VAT risk sits. Book a call and we will go through it with you.