Charging VAT when selling to the UK
Starting January 1, 2021, the UK introduced new rules on cross-border sales. According to them, all goods that enter the UK from any other country are considered imports.
If you are a foreign business selling into the UK, you are likely to be required to register for UK VAT, charge it in your online store, and remit the collected VAT to the UK government. Our platform allows you to set up your store to meet these requirements for goods shipped into the UK.
Am I supposed to register for the UK VAT?
Generally, non-UK established sellers are required to register for UK VAT if they:
- Sell taxable goods via an ecommerce store;
- Have orders that are to be shipped to an address in the UK;
- Have any orders that cost £135 or less (for all the ordered items combined and without taxes, shipping, insurance, or any other charges unless they are included in the price).
If all these conditions apply, you’re supposed to:
1) register for UK VAT; 2) charge VAT for all the low-value orders below £135 in your online store checkout; 3) remit collected VAT to the UK government. When shipping orders, you will then need to specify in your customs declarations that VAT was paid at checkout so that it’s not charged again at the border by customs.
Orders that cost over £135 are not to be charged VAT at checkout; they will be taxed at customs upon arrival to the UK. So, if you only have orders over £135, registering for UK VAT is not necessary for you.
Also, you’re not required to register for VAT if you’re only selling B2B, as long as your UK customers provide their VAT registration number for low-value orders. In this case, you’ll need to include their VAT number in the invoice, along with a note that the reverse charge will apply.
Learn more about UK VAT rules for overseas sellers →
Registering for the UK VAT
Usually, you can register for a VAT number online. The process takes around 30 business days.
While our platform allows you to charge due VAT at checkout, we do not declare taxed amounts or provide any other information to HM Revenue and Customs (HMRC). You must take care of it yourself.
After you register for UK VAT, you'll need to:
- Keep records of the goods sold;
- Issue VAT invoices;
- Remit the collected VAT to the HMRC on a quarterly basis through your account on their website.
Learn more about charging, reclaiming, and recording VAT →
Overseas businesses can appoint a fiscal representative: a local company or person who will represent you for VAT purposes and deal with HMRC on your behalf.
Charging UK VAT at checkout via automatic taxes
By default, if you’re using automatic taxes in your store, orders that have foreign countries as their shipping destination are not taxed. If you’re looking to charge VAT on your UK orders under £135, you need to enable it on the Taxes page in your store admin.
To charge VAT on orders under £135 that are to be shipped to the UK:
- From your admin, go to Settings → Taxes & Invoices.
- Scroll down to Settings.
- Enable the Charge VAT to the United Kingdom customers at checkout toggle.
- The changes will be saved automatically.
That’s it! Now, if an order costs £135 or less and the shipping destination is inside the UK, 20% tax will be applied to the customer's cart right at checkout. If your store currency is not pound sterling, the prices will be converted according to our platform's internal rates before applying the tax.
Orders that cost over £135 will not be charged UK VAT. For them, taxes and necessary duties can be paid by customers at customs or to the delivery agent before receiving the order.
Charging UK VAT at checkout via manual taxes
If you’re using manual taxes in your store, you can set them up to charge VAT on all your UK imports regardless of their cost. You can go for this option if:
- Automatic taxes are not available in your country;
- Orders in your store never exceed the £135 limit;
- You’re using a custom workflow, e.g., you pay import VAT and duties on clearance for orders over £135 yourself or using a shipping/customs agent.
To charge VAT on all orders that are to be shipped to the UK:
- In Settings → Taxes & Invoices, create a new tax named “VAT” or “UK VAT”.
- Create a separate destination zone for the United Kingdom.
- Set the 20% tax rate in the Rates per zone section:
That’s it! Now, if the shipping destination for an order is inside the UK, 20% tax will be applied to the customer's cart right at checkout. The tax will be applied to all the orders.
Issuing VAT invoices
When you ship your orders to the UK, you will need to enclose a VAT invoice for customs clearance. You can use our tax invoices if they are available in your country, or you can use your store's regular invoices.
As soon as you register for a UK VAT number, make sure you include it in all your invoices. You may also need to add comments like “reverse charge: customer to account for VAT to HMRC” for your B2B sales. Learn how you can edit tax invoices or regular invoices →