VAT & E-Commerce in the UK: Everything You Need to Know

Being active in the UK is a two-edged sword for an E-Commerce seller.

The UK has a large number of prospective consumers with a lot of spending power.

On the other hand, cross-border selling became more challenging as a result of the UK’s withdrawal from the European Union, particularly in terms of tax issues.

In order to grow into Great Britain and begin selling to British clients, what steps must you take?

We put together a fast tutorial with hellotax that explains the VAT-related issues you need to take care of.

the UK’s VAT registration

VAT & E-Commerce in the UK: Everything You Need to Know

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There is a VAT threshold for UK companies that determines whether or not they must register for VAT.

If a UK company anticipates generating more than £85,000 in VAT-taxable sales in the upcoming 30 days,


A company must register for VAT if its VAT taxable turnover exceeded £85,000 in the previous 12 months.

No matter when you register, the day you learn your turnover will surpass the threshold is your effective date of registration, the day from which on you are responsible for VAT.

For enterprises outside of the UK, the issue is more clear-cut.

You must register for VAT if neither you nor your business are situated in the UK as soon as you offer goods and services to the UK or if you intend to do so within the following 30 days.

You must create an account with the “Government Gateway” in order to register for VAT in the UK.

After that, an English VAT number is obtained and the account is utilized to register for UK VAT. The VAT number will be sent to you after around 30 days.

The VAT ID in Great Britain is made up of nine digits plus the country code GB.

If you intend to import products into the UK, you will also need to apply for an EORI number, which is needed for customs procedures.

Merchandise in the UK

VAT & E-Commerce in the UK: Everything You Need to Know

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After registering for VAT, you can start selling goods to clients in the UK.

You may do this using the platforms and fulfilment networks provided by Amazon, as well as using your own hosted online store and a contracted fulfilling partner.

Your following steps involve a lot of paperwork in any case.

For purchases from UK consumers, you must first apply the UK VAT rates.

If you utilize store systems like Shopify or others, you will need to make adjustments in the software while Amazon makes changes to their checkout page automatically.

Imports and customs will be the next issue you must resolve. Since the UK left the European Union, sending items to consumers in the UK now counts as an import once they get there.

As a result, you are responsible for both import VAT and regular VAT, which presents a challenge for many vendors.

Once the shipment reaches the border, the import VAT is often required. Import VAT may consequently be required before you even deliver the product to your final customer or get payment, depending on your fulfilment method and business strategy.

The import VAT can only be claimed back in later, regularly-filed VAT returns.

Since Brexit, this reality has resulted in negative cash flows for firms operating in the UK and abroad.

Thankfully, the UK has established the “UK postponed VAT Accounting program,” which enables companies to defer paying import VAT until after completing their normal VAT reports.

The EU Reverse-Charge-Mechanism is basically replaced by the scheme.

To use the Postponed VAT Accounting scheme you will need to indicate this by writing a “G” into box 47 on your customs declarations.

This way, customs will not hold your goods but note that import VAT will be accounted for later on.

The delayed import VAT must be entered in boxes 1 and 4 of your VAT return later on.

The VAT owed is shown in the first box, and the VAT recovered is shown in the fourth box. The two amounts often cancel each other out. Lastly, in Box 7 you should include the total net value (value excluding VAT) of all imports for which you postponed VAT.

Returns on UK VAT

VAT & E-Commerce in the UK: Everything You Need to Know

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What is the procedure for filing VAT returns in the UK, and is it even necessary?

Yes, it is the solution.

Every firm, whether domestic or foreign, that has to register for VAT in the United Kingdom is also required to file VAT returns on a regular basis.

Quarterly returns for VAT are needed four times a year.

The filing date is always one month and seven days following the conclusion of the preceding accounting period. You also have the choice to submit VAT reports only once a year if your annual revenue is less than £1.35 million.

But there’s a problem.

At the start of the current year, you must prepay a specific amount of VAT that is projected based on the prior year.

Ultimately, depending on how business performed that year, you will either get a rebate or owe more VAT.

It’s time to gather VAT returns when the deadlines approach.

Whether you registered for Making Tax Digital for VAT will determine where to obtain the VAT return form.

The UK tax system will become the most digital in the world thanks to this new initiative.

You may use accounting software that is compatible with the new application if you have registered. Use your “Government Gateway” account if not.

Naturally, a VAT number is required in both situations in order to effectively file the VAT returns.

VAT & E-Commerce in the UK: Everything You Need to Know
Business woman hand typing on keyboard with online shopping concept

You can design your ideal packaging here online: Pacdora

And last, managing VAT in a foreign nation is challenging. Even if you know the language of the country, as is the case with the UK, having to deal with different rules, deadlines, software, and forms reduces your productivity. However, there is a fix.

A VAT service provider with a focus on e-commerce is hellotax.

The form boasts a staff of local tax accountants in the UK and other European nations that register you for VAT and submit all required paperwork and returns, as well as software that automatically compiles your VAT returns.

While you may continue to focus on your business in the UK, they handle all VAT responsibilities.

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