Selling into the UK means VAT is decided by the consignment value, with a hard line at 135 pounds. Below it the overseas seller charges UK VAT at checkout. Above it the tax moves to import. This post walks through both routes and the registration each one needs.
Since the UK left the EU VAT area, low value imports lost the old relief that let small parcels in tax free. The replacement is a point of sale model. If the goods in a consignment are worth 135 pounds or less and the buyer is a UK consumer, the seller charges UK VAT at checkout, exactly as a British shop would.
Above that threshold the goods go through the older import route: VAT is charged on importation, duty may apply by classification, and the carrier collects from the buyer unless the seller ships on delivered duty paid terms.
One order can straddle the line if it is split. HMRC looks at the consignment as shipped, and artificially splitting an order to stay under the threshold is treated as avoidance, not clever planning.
A US brand charging UK VAT needs a UK VAT registration, or it needs to sell through a marketplace that takes on the VAT obligation for sales made on its platform. Marketplaces are deemed the supplier for VAT on those sales, which is why the same brand can owe nothing on its marketplace orders and owe filings on its own webstore orders.
Returns need handling in the VAT return, not just in the warehouse. Refunded sales reduce the VAT due, but only if the refund is documented and the goods or their destruction are accounted for. Brands that reconcile UK VAT from webstore reports alone, without the returns file, overpay quietly for years.
The honest version is simple: the price at checkout is the final price. UK shoppers have been burned by carrier invoices demanding VAT and a handling fee after delivery, and a brand that ships low value orders without charging VAT at sale is choosing that outcome for its customers.
Above the threshold, if the brand sells on a delivered at place basis, the carrier bill lands on the buyer. Say so before payment, in pounds, as an estimate labelled as an estimate. The brands that state it plainly get fewer refused parcels than the brands that hide it in a help page.
Confirm which channel owes the VAT for each route to market: own webstore, each marketplace, any UK distributor. Register before the first sale, not after the first quarter. Set the webstore tax engine to charge UK VAT on consignments at or under 135 pounds, and test it with a real basket at 134 and at 136 pounds. The boundary basket is where configuration errors live.
Keep reading: Returns across borders: making the second journey cheaper, Address formats for cross border deliveries: avoiding failed drops, and Duties at checkout versus on delivery: choosing the honest option cover the nearby cases in this series.
Yes, for direct sales of consignments worth 135 pounds or less, unless the sale goes through a marketplace that assumes the VAT obligation. There is no registration threshold for overseas sellers on these sales the way there is for UK businesses.
The goods can still be delivered, but VAT becomes collectible on import and the carrier may bill the shopper with a handling fee on top. The brand also carries an unfiled UK VAT liability for those sales, which surfaces during due diligence or a marketplace review.
A refunded sale reduces the VAT the seller owes, claimed through the VAT return with the refund documented. Keep the refund record tied to the original order and VAT amount so the adjustment can be evidenced if HMRC asks.
Per consignment: the total value of the goods shipped together to the buyer, excluding separately itemised transport. Splitting one order into parcels to stay under the line does not change the treatment and can be challenged as artificial separation.