VAT and overseas goods sold directly to customers in Great Britain from 1 January 2021
How sellers will deal with VAT for goods from overseas that they sell direct to customers in Great Britain from 1 January 2021.
New rules for January 2021
The UK has left the EU, and the transition period after Brexit comes to an end this year.
This page tells you what you’ll need to do from 1 January 2021. It will be updated if anything changes.
Check what else you need to do during the transition period.
There is separate guidance for overseas businesses selling goods to customers in Great Britain using online marketplaces from 1 January 2021.
Overview
From 11pm on 31 December 2020, UK supply VAT is due at the point of sale on consignments of goods that are outside Great Britain (England, Scotland and Wales) and sold directly to customers (not through an online marketplace) in Great Britain with a value of £135 or less.
The £135 limit applies to the value of a total consignment that is imported, not the separate value of individual items that are in a consignment.
Guidance for goods sold in Northern Ireland will be published at a later date.
These rules will not apply to the import of:
- consignments of goods containing excise goods – find out more about importing excise goods to the UK from the EU from 1 January 2021
- non-commercial goods (for example, gifts) – find out more about tax and customs for gifts sent from abroad
These rules will also not apply to consignments of goods from Jersey and Guernsey, if VAT is collected and paid to HMRC under the Import VAT Accounting Scheme.
Goods that are outside of Great Britain at the point of sale
The seller must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including:
- any transport or insurance costs, unless they are included in the price and not separately shown on the invoice
- any other identifiable taxes and charges
Unless sent individually, the seller must add the individual values of all items in a consignment together to get the total value of the consignment.
If a seller make changes to the value of the consignment so that its total value goes above £135 they may be liable for import VAT and Customs Duty, and have to adjust the VAT already accounted for at the point of sale.
Consignments valued at £135 or less
The seller must charge and account for VAT at the point of sale, unless the consignment is a business to business sale and the customer has given them their UK VAT registration number.
To charge and account for VAT the seller will need to:
- know the precise nature of the goods to find out the correct rate of VAT to charge
- register for VAT – sellers that are already registered for VAT do not need to re-register
- keep records of the goods sold, and make sure they get accurate information to apply the correct VAT treatment to them
Business to business sales to UK VAT-registered customers
The seller will not need to charge and account for VAT if the customer gives them their VAT registration number, and they confirm it’s correct using the new online service that will be available from December 2020.
The seller can add a note to the invoice (for example, by writing ‘reverse charge: customer to account for VAT to HMRC’) then send it to the UK business customer.
The business customer will then be responsible for accounting for any VAT due on their VAT Return using a ‘reverse charge’ procedure, and will be able to recover the VAT as input tax on the same VAT Return under normal VAT recovery rules.
Sellers do not have to register for VAT if they only sell goods that are outside the UK at the point of sale to UK VAT-registered businesses.
Consignments valued at more than £135
Normal VAT and customs rules will apply on importation of the goods.
Read VAT Notice 702 to find out more about how imported goods are treated for VAT purposes.
Goods that are in Great Britain at the point of sale
If you are a seller who owns goods of any value that are located in the UK at the point of sale you must register and account for VAT on any sales you make directly to customers in Great Britain.
There are different rules if you import goods then sell them through an online marketplace.
VAT invoices
The normal rules for the content and format of VAT invoices will apply.
The seller should issue a full paper or digital invoice for goods.
VAT records
The seller must keep full records (including VAT invoices) for 6 years from the date any goods are sold.
Find out more about VAT record keeping.
The Flat Rate Scheme
Sellers who are using the Flat Rate Scheme must decide if they want to remain in the scheme from 1 January 2021.
Any sales a seller makes through an online marketplace, where the online marketplace is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation from 1 January 2021.
Sellers who decide to remain in the scheme will continue to be subject to its conditions, including the restrictions on recovering VAT.
A seller can decide to leave the scheme at any time.
Goods sold before 1 January 2021
If a seller receives payment for an order before 11pm on 31 December 2020 and dispatch the item after that time, these rules will not apply.