There are special rules for charging, collecting, and paying VAT on low value goods which are imported into the UK. It can get a bit complicated, so we’ll explain what’s classed as a low value import for VAT purposes, and what your responsibilities are.
For VAT purposes this refers to goods imported into the UK with a value of £135 or less. The value is worked out based on the total consignment of goods, rather than the value of separate individual items within it.
Who collects the VAT on low value imports?
The rules for collecting VAT on low value shipments coming into the UK depend on whether the buyer is a business, or a regular consumer. There are different rules for selling through an online marketplace.
B2B (business to business) – where businesses sell to other businesses
B2C (business to consumer) – where businesses sell directly to the end customer
Low value imports by UK customers (B2C)
B2C imports are where the end customer buys goods from overseas for their own personal use. Under the low value import rules, these customers should pay VAT at the point-of-sale if the shipment’s value is less than £135.
Point-of-sale means exactly that, the point at which the sale is made. This means that the seller is responsible for charging UK VAT on the sale.
Does the seller need to register for UK VAT?
Yes, these changes mean that the seller (or their postal service) must register for UK VAT in order to charge it to the UK customer. Watch our introductory video to UK VAT if you need to know more about this, or carry on reading below.
The customs invoice will need to show that VAT has been paid so that the goods can enter the UK. Sadly, this extra work means some sellers no longer want to ship to UK consumers.
What if the shipment is worth more than £135?
UK customers won’t pay VAT at the point-of-sale if the shipment’s value is worth more than £135. Instead, the customer will pay import VAT and duty at the border as usual.
The seller won’t have to register for UK VAT, and they won’t need to show VAT on the customs invoice. It does mean that the customs invoice must show the shipment’s value is higher than the £135 threshold.
Comprehensive VAT return service
From only £40.00 per month
Low value imports made by UK businesses (B2B)
If the buyer is a UK business, (so it’s one business selling to another, rather than selling directly to a customer who is buying something for personal use), then the seller doesn’t need to charge VAT on the sale as long as:
The buyer is a UK business
The goods are bought from another business which is overseas
You import those goods into the UK
The shipment is worth less than £135
How will I pay the VAT?
If your business buys low value goods from a business overseas and you import these goods into the UK, the way that you pay the VAT depends on whether or not you’re VAT registered.
VAT registered: Account for the VAT as a reverse charge on your VAT return
Not VAT registered: Pay the import VAT at the border
VAT on imports bought through an online marketplace
A UK customer buying goods from overseas through an online marketplace (such as Etsy or Amazon) will pay VAT at the point-of-sale. The difference here is that it’s the marketplace which must register for UK VAT, not the individual seller using the platform. This is true whether the goods are for a business (B2B), or for personal use (B2C).
Many online marketplaces have options for sellers to print off customs invoices where goods are being shipped overseas. This will show that VAT has already been paid by the customer, which will help shipments avoid delays at the border.