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. This exception is relevant only where the UK customer is VAT registered and provides a valid UK VAT number. For B2C sales, the marketplace normally remains responsible for charging and reporting the UK VAT under the deemed supplier rules.
The low value exemption of 15 GBP does not apply since December 2020. In practice, the relief stopped applying from 1 January 2021 under the post-Brexit e-commerce rules.
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
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.
Your sell via your own website
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.
- This manual explains the rules on VAT and overseas goods sold directly to customers in the UK.
- If you are using an online marketplace, you can find more information here: VAT and overseas goods sold to customers in the UK using online marketplaces.
- This manual explains the rules for overseas businesses selling goods online to Northern Ireland.
