United KingdomManual

The UK has a standard VAT rate and one reduced VAT rate. In addition, a number of items are zero rated

UK Distance sales. VAT on e-commerce

UK Distance sales. VAT on e-commerce

The VAT rules for the e-commerce businesses selling in the UK depend on the location of the goods and the use (or not) of a marketplace to sell your products.

There are different scenarios, so we listed all these situations to help you determine what exactly needs to be done by your business when selling only in the UK.

Skip through the text and check our summary table on the applicable rules for e-commerce sales in the UK.  This article is referring to the UK in general, but special rules apply on sales to Northern Ireland.

You use Amazon or another marketplace

You will be using a marketplace if another platform takes care of the order, payment and terms and conditions for you. In this case, the marketplace takes additional responsibility for your sales. There are two possible scenarios.

You ship goods from abroad into the UK

If you are a foreign non-UK online seller and your UK client makes an order via an online platform, the rules will depend on the value of your sale.

  • Sales below 135 GBP: The marketplace is the deemed supplier. This means that, for VAT purposes, you will sell your goods to the marketplace and, subsequently, the marketplace will charge VAT to the final client. It is the marketplace who is responsible to account for and pay UK VAT. You do not have to register for UK VAT, nor to clear import VAT at customs.
  • Sales above 135 GBP: You pay VAT at importation, clear customs and charge VAT on your sales to your customer. You will need a VAT registration and your transport company (or someone else locally) should act an indirect representative for customs purposes. You will also need to need to submit VAT returns. Our step by step guide on importing goods in the UK and our article on import VAT accounting can help you. As an alternative, you can have your customer paying VAT and customs duties “at his or her door” so you would avoid the obligation to register.

The value is calculated based on the cost of your parcel. So if you ship more than one product, you will need to add up to the total cost of the shipment.

If you are selling to a VAT registered customer via an online marketplace and the value is below 135 GBP, the marketplace will not charge VAT. Reverse charge applies in these cases.

The low value exemption of 15 GBP does not apply since December 2020.

Your goods are in the UK at the moment of sale (eg. Inventory in the UK)

You will make a deemed sale to the marketplace, who will then charge VAT to the final client. This rule applies irrespective of the value of the products.

Because you already hold stock in the UK, you would have imported those products and cleared customs previously, so you will need to complete all customs documentation, get a UK VAT number to recover import VAT and report zero-rated sales on your UK VAT return.  

If the client is a VAT registered company, the seller will need to account for VAT and report this sale as output VAT on his or her VAT return.

If you are an Amazon seller, read the Amazon guide about this topic in your seller account.

 

  • You sell via Amazon or another marketplace

  • Goods outside of the UK at the moment of sale
    • Shipment value < 135 GBP
      You sell with 0% VAT to the marketplace and VAT is charged by the marketplace to the client
      No VAT registration required
    • Shipment value > 135 GBP
      Import VAT incurred and VAT charged on sales
      VAT registration, indirect representative and VAT returns required
  • Goods in the UK at the moment of sale
    • Any value

      You incur VAT and duties at importation. You sell with 0% VAT to the marketplace and VAT is charged by the marketplace to the client.
      B2B sales must charge VAT
      VAT registration to recover import VAT, indirect representation and VAT returns required 

You use your own website to sell your products (no marketplace)

You ship goods from abroad into the UK

If you are a foreign non-UK online seller and your UK client makes an order via your own website, the rules will depend on the value of your sale:

  • Sales below 135 GBP: No import VAT is due. You will charge UK VAT on your sale and account for this supply on your UK VAT return. You will still need a simplified customs declaration and a VAT registration to account for these sales. You will also need to appoint an indirect representative for customs purposes.
  • Sales above 135 GBP:  You pay VAT at importation, clear customs and charge VAT on your sales to your customer. You will also need a VAT number. Read our article on how to import goods in the UK and our import VAT accounting explanations to help you prepare your VAT return.

Your goods are in the UK at the moment of sale (eg. Inventory in the UK)

You will import the goods and clear customs at importation. You will then charge VAT on your sales to your clients made from your UK warehouse. To do so, you will need a VAT registration and to appoint an indirect customs representative.

 

  • You sell via your own website

  • Goods outside of the UK at the moment of sale
    • Shipment value < 135 GBP
      No import VAT due. Charge UK VAT at on the point of sale and account for this VAT in your VAT return.
      VAT registration, simplified customs declaration, representative and VAT returns required
    • Shipment value > 135 GBP
      Import VAT incurred and VAT charged on sales
      VAT registration, customs declaration, indirect representative and VAT returns required
  • Goods in the UK at the moment of sale
    • Any value

      You incur VAT and duties at importation. You charge VAT on your B2B and B2C sales from the UK warehouse
      VAT registration, indirect representation and VAT returns required

More information about e-commerce rules in the UK

HMRC and the UK government published several notices and manuals about e-commerce rules for UK and foreign sellers.

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