Do I have to pay Value Added Tax (VAT) when shipping to the UK?

Starting 1st January 2021, all goods shipped to the UK are subject to VAT regardless of the price of the goods in the shipment. Previously, the threshold was only goods over £15 were subjected to a 20% VAT.

These changes are meant to address UK business competitiveness and will primarily affect merchants and shippers in the US, Canada and Australia since the UK tends to import products from sellers in these markets.

VAT requirements differ depending on the exact method of how your goods arrive in the UK. Here are three scenarios that may affect merchants that ship through ShipStation:

  • For e-commerce marketplace sales, the marketplace is responsible for collecting and remitting the VAT to the proper UK customs authority. 

  • If a product is sold and exported in an ecommerce environment outside of a marketplace sale, the overseas seller might be required to register directly with the HMRC (the UK Customs Authority).

  • If an overseas seller already has products in the UK (as in, with a fulfillment provider in market), then the seller will be responsible for accounting for the VAT on goods already in market and will have to account for it with the HMRC as well.

To be sure you understand the needs of your specific scenario and whether you need to register with the UK Customs Authority and apply for an EORI number, we recommend you discuss these changes with your preferred international carrier and the marketplaces on which you sell. Additionally, you may wish to consult a tax software and compliance company such as Avalara.

Review this Import and Export Process help page to learn more about any requirements you may need to follow.

Do I need to register for an EORI number to ship to the UK?

Most merchants shipping to the UK are not required to have an EORI number, though in some cases it may be beneficial, depending on your selling scenario or shipping methods.

  • Marketplace merchants

    If you only do marketplace sales, then you do not need an EORI number, since collecting VAT is the marketplace's responsibility.

  • Brands shipping direct to consumer (not via a marketplace)

    If you ship DDP (Delivery Duty Paid), you do not need an EORI number. Your carrier will bill you for the tax on a per shipment basis. Contact your carrier to discuss how this will be billed to your account. You may still need to collect the fees from your consumer upon checkout.

    If you ship DDU (Delivery Duty Unpaid), it is recommended you set up an EORI number so you can proactively pay the tax to HMRC. This has the added benefit of helping you keep shipping costs low.

Here are a few useful resources for merchants who wish to apply for EORI: