New UK VAT laws have kicked in since 1st Jan 2021. Sales to UK for goods £15 or lower in value will no longer be exempted from VAT. This also affects UK sellers selling to the EU.
VAT will no longer be charged at point of import for goods below £135 (previously, we helped you declare VAT when we ship your orders to the UK). Now, VAT will be accounted for at point of sale. UK sellers selling to the EU may also be required to register for VAT.
You are highly encouraged to register for UK VAT if you are selling to the UK. VAT rate for UK is 20%, which you can set in your store.
This does not constitute legal or tax advice. This merely represents our interpretation of the changes from Brexit. You should consult your legal or tax advisor if in doubt.
Why is this happening?
The changes to UK VAT comes about as the Brexit transition period ends on 31 Dec 2020 – The UK has left the EU customs union.
How would it impact me?
No impact (yet) if you are not selling to the UK. However, the removal of VAT exemption for low value goods is a game-changer; potentially, EU and other nations may follow.
• If you are selling to the UK, you will need to register for VAT in the UK and collect VAT at the point of sales for orders going to the UK.
• If you are based in UK and selling to the EU, you may also be required to register and account for EU VAT.
Rules differ depending on your location. Check out more in the following websites:
What should I do?
If you haven’t registered for VAT, you may be able to continue selling your products for the time being. However, we highly encourage you to register for UK VAT if you intend to sell to the UK. We are unclear of enforcement while the UK VAT office is most likely overwhelmed with applications at this moment.
Register for VAT here: https://www.gov.uk/guidance/register-for-vat
You may configure the collection of VAT in your Shopify store, by referring to the guide here: https://help.shopify.com/en/manual/taxes/location-based
