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Brexit UK VAT for EU & US ecommerce sellers

  • Jan 1, 2021 | Richard Asquith

EU and US ecommerce sellers face hard choices on taxes and customs in 2021, the end of the Brexit transition period.  The UK’s HMRC has imposed new ecommerce VAT registration and customs obligations on any non-UK merchant selling goods consignments to UK consumers not exceeding ≤£135 (about €150 or $175). There is no annual selling threshold – you must UK VAT register and report quarterly. Check EU VAT rules for UK ecommerce sellers after Brexit.

Failure to address from 1 January 2021 will mean:

  • Blocked goods at the border;
  • Tax penalties;
  • Upset customers; plus
  • If you sell via a marketplace, you will likely be blocked without a UK VAT number

Contact Avalara’s Brexit Team who can explain the details, express your UK VAT registration and provide details of our automated checkout VAT plugins.

What’s changed on UK ecommerce VAT in 2021?

The UK made the following changes to the ecommerce VAT rules from 1 January 2021 after it left the EU VAT regime and Customs Union:

  • The UK removed the £15 VAT-exemption on small value parcels. All sales to UK consumers are now subject import VAT.
  • Sales of goods in consignments not exceeding £135 shipped from outside of the UK to a UK consumer should be charged with UK VAT at 20% in the checkout. This is done by the seller. So the UK is moving the import VAT from the border to the point-of-sale.
  • The seller has to produce a customs invoice, with the UK VAT showing, to clear the goods into the UK. There is also be a requirement for a slimmed-down customs declaration. If you are importing into the UK, you must be a resident business for certain Customs issues, including the declarations. You may require an import customs representative.
  • The seller must be UK VAT registered to report this each quarter to HMRC, and pay the VAT collected in the checkout
  • The seller may no longer rely on their freight company to collect the VAT from their customer.
  • If the goods consignment is above £135, then the old import VAT rules apply. So the seller or the shopper can pay the UK import VAT
  • NOTE: there are no UK tariffs due on consignments into the UK below £135.

How do I get UK VAT registered?

Avalara’s UK VAT experts can help you get UK VAT registered in just a few weeks. And it’s all done online, with little paper document delays. We just need some basic information – Director passport copies; company details and a Power of Attorney – and will express the application process for you. This includes handling the common questions raised prior to the issuance of the number. The UK is particularly weary of businesses not able to clarify they understand the new rules, or provide proof of their trading models.

Once VAT registered, we can also take care of the whole UK compliance procedure, including quarterly VAT returns and UK invoice obligations. Plus, if you need to file UK Intrastat arrivals (imports) submissions.

Explore more content like this in our Brexit hub

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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