How sellers deal with VAT for goods from overseas that they sell direct to customers in the UK.
Overview
Consignments of goods with a value of £135 or less that are outside:
the UK and sold directly to customers (not through an online marketplace) in Great Britain (England, Scotland and Wales) will have UK supply VAT charged at the point of sale
the UK and EU and sold directly to customers (not through an online marketplace) in Northern Ireland will have import VAT charged
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.
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 the UK 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.
For goods supplied into Northern Ireland from outside the UK and EU, low value consignment relief will no longer apply and the seller will be liable to account for the VAT on the VAT return instead of at the border.
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. The seller can confirm it’s correct using the online service.
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, if the goods are supplied in Great Britain — using a ‘reverse charge’ procedure.
Where goods are supplied in Northern Ireland the business customer will be responsible for accounting for any VAT due. They may account for it using postponed VAT accounting or any other means of paying import.
In both cases, the business customer 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 into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU.
If you are an overseas 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 or Northern Ireland.
Sellers who are using the Flat Rate Scheme must have decided if they wanted to remain in the scheme by 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 decided 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 received payment for an order before 11pm on 31 December 2020 and dispatched the item after that time, these rules would not apply.
Five ways you can get financial support for your business
1. Claim up to £5,000 with the Employment Allowance
Employment Allowance is a tax relief which allows eligible businesses to reduce their National Insurance contributions (NICs) bills each year. You can claim this if you’re a business, and your employer Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
Last month we increased the Employment Allowance from £4,000 to £5,000 to further benefit SMEs.
That’s a new tax cut worth up to £1,000 for nearly half a million SMEs (30% of all businesses). This includes around 50,000 businesses which will be taken out of paying NICs and the Health and Social Care Levy entirely.
2. Get a discount of up to £5,000 on software, with Help to Grow
Help to Grow: Digital is a UK-wide government-backed scheme that aims to help you choose, buy and adopt digital technologies that will help you grow your business.
Eligible businesses can receive a 50% discount on buying new software worth up to £5,000 per SME, alongside free impartial advice and guidance about what digital technology is best suited to boost your business performance.
The Help to Grow: Management scheme provides small businesses with access to world-class business expertise on everything from leadership and financial management to marketing and digital adoption. This is delivered through leading UK business schools, alongside one-on-one support from a business mentor – and is 90% funded by the government.
By the end of the programme you will develop a business growth plan to help you lead and grow your business. Businesses which have previously taken part in the course – including James Lister & Sons, Wilkinson Construction Consultants Ltd and Seacat Services Ltd – strongly recommend the programme to anyone who is trying to grow their business.
To be eligible, you must be a UK-based SME, actively trading for at least one year and have a total of between 5 and 249 employees.
For more information and to apply, visit Help to Grow on GOV.UK.
3. Get up to half off your business rates
From April this year, small retail, hospitality, and leisure businesses can benefit from 50% off their business rates bills. This is worth £1.7 billion for up to 400,000 eligible properties.
The business rates multiplier has also been frozen for another year, saving businesses £4.6 billion over the next 5 years. This is used to calculate how much business rates they should pay, and it usually rises with inflation each year.
The business rates multipliers for 2022 to 2023 are 49.9 pence for the small business multiplier and 51.2 pence for the standard multiplier.
From April 2022 there will be no business rates due on a range of green technology, including solar panels and batteries, whilst eligible heat networks will also receive 100% relief. Together these will save businesses around £200 million over the next five years.
4.Invest in your business with Super-deduction and Annual Investment Allowance
To spur business investment, the super-deduction allows companies to cut their tax bill by 25 pence for every £1 they invest in any qualifying machinery and equipment. This can include the purchase of computers, most commercial vehicles and office furniture.
The temporary £1 million limit for the Annual Investment Allowance has also been extended to the end of March 2023. This had been due to revert to £200,000 at the start of 2022. The Annual Investment Allowance allows businesses to spend up to £1 million on qualifying business equipment, and deduct in-year its full cost before they calculate their taxable profits.
Both of these tax breaks remain available for firms to take advantage of until the end of March 2023, by incurring qualifying expenditure before then.
5. Benefit from the cut in Fuel Duty
The government has cut fuel duty on petrol and diesel by 5 pence per litre for 12 months – effective from 23 March 2022.
This cut, plus the freeze in fuel duty in 2022 to 2023, represents a £5 billion saving worth around:
•
£200 for the average van driver
•
£1,500 for the average haulier
To find out what other support may be available for your business, search 'business support' on GOV.UK.
The UK trade in numbers contains the latest published UK trade and investment statistics. It draws on a number of statistical sources including the Office for National Statistics (ONS), the Department for International Trade (DIT), and the United Nations Conference on Trade and Development (UNCTAD).
Trade statistics are derived from a number of sources and can be presented in different ways. The UK’s trade statistics are primarily provided by ONS releases including the ONS monthly UK trade, ONS UK quarterly trade by partner country, and ONS UK balance of payments. These releases set out the UK’s economic relationship with other countries and illustrate the UK’s bilateral trade on top exports and imports for goods and services.
In addition, the UK trade in numbers depicts foreign direct investment, regional trade statistics, and the UK’s position in global trade and investment rankings.
More information on the data sources used in the UK trade in numbers publication are available in the UK trade in numbers: sources.
This latest publication of the UK trade in numbers includes data updates from:
ONS UK trade: March 2022 (published 12 May 2022)
ONS UK total trade: all countries October to December 2021 (published 28 April 2022)
The next published update to the UK trade in numbers will be 20 June 2022.
This will include data updates from:
ONS UK trade: April 2022 (due for release 13 June 2022)
UNCTAD World Investment Report 2022 (due for release 9 June 2022)
2. UK trade summary statistics
From January 2022, HMRC data collection methodology has changed for both EU goods imports and EU goods exports. The ONS have published an accompanying blog providing more detail on the changes. Caution should be taken when interpreting trade with the EU for periods that include January 2022 data.
2.1 Value of UK total trade in the 12 months to the end of March 2022
£1,343.2 billion
up 13.3% on the previous 12 months
Notes: estimates only cover registered businesses (for VAT and/or PAYE) in the GB (excludes Northern Ireland) non-financial business economy, which accounts for around two-thirds of the economy in terms of gross value added.
Response rates for 2019 data were impacted by the coronavirus (COVID-19) pandemic. Figures for 2019 should not be compared to figures from previous years.
Notes: Estimates only cover registered businesses (for VAT and/or PAYE) in the GB (excludes Northern Ireland) non-financial business economy, which accounts for around two-thirds of the economy in terms of gross value added.
Response rates for 2019 data were impacted by the coronavirus pandemic. Figures for 2019 should not be compared to figures from previous years.
Notes: figures in current prices, non-seasonally adjusted, on a balance of payments basis.
Goods classifications as reported by the ONS, derived from Standard International Trade Classifications (SITC).
Unspecified goods includes non-monetary gold and other precious metals (silver, platinum, palladium), parcel post, low value trade, coins, and defence equipment.
3.4 Top 5 UK services exports 4 quarters to the end of December 2021
Notes: figures in current prices, seasonally adjusted, on a balance of payments basis.
‘Other business services’ comprises professional and management consulting services including legal, accounting, management consulting, public relations, advertising, and market research; technical and trade-related business services including architectural, engineering, and scientific services; and research and development services.
Notes: figures in current prices, seasonally adjusted, on a balance of payments basis.
‘Other business services’ comprises professional and management consulting services including legal, accounting, management consulting, public relations, advertising, and market research; technical and trade-related business services including architectural, engineering, and scientific services; and research and development services.
Notes: figures are in current prices, on a balance of payments basis. Figures exclude non-monetary gold.
Trade data is allocated to each region by linking to data in the Inter-Departmental Business Register (IDBR) and then apportioning by employment count data.
5.2 UK imports by UK nations and English regions 2019
Notes: figures are in current prices, on a balance of payments basis. Figures exclude non-monetary gold.
Trade data is allocated to each region by linking to data in the Inter-Departmental Business Register (IDBR) and then apportioning by employment count data.
6. Foreign direct investment statistics
The ONS have implemented several improvements to their FDI survey methodology for the 2020 release . Changes to stratification methods and sampling population increases have affected the results and led to an increase in reported FDI figures, particularly for inward FDI, in 2020.
As a result of these improvements, we advise caution when interpreting the 2020 results as some increases since 2019 may be due to the methodology changes.
Notes: figures are in current prices, on a directional basis.
FDI statistics are compiled on the basis of the immediate, rather than the ultimate, partner country. Pass-through investment often leads to an overstatement of investments in or from big financial centres, or countries offering favourable tax terms to investors, distorting the geographical distribution of FDI flows and FDI rankings.
Notes: figures are in current prices, on a directional basis.
FDI statistics are compiled on the basis of the immediate, rather than the ultimate, partner country. Pass-through investment often leads to an overstatement of investments in or from big financial centres, or countries offering favourable tax terms to investors, distorting the geographical distribution of FDI flows and FDI rankings.
6.7 Global ranking outward FDI stock
In 2020 the UK ranked
4th
no change compared to 2019
The Government has concluded that it would be wrong to impose new administrative requirements on businesses who may pass-on the associated costs to consumers.
The remaining import controls on EU goods will no longer be introduced this year, the government has announced today.
Instead, traders will continue to move their goods from the European Union to Great Britain as they do now.
Russia’s illegal invasion of Ukraine, and the recent rise in global energy costs, have had a significant effect on supply chains that are still recovering from the pandemic.
The government has therefore concluded that it would be wrong to impose new administrative requirements on businesses who may pass-on the associated costs to consumers already facing pressures on their finances.
The change in approach is expected to save British importers at least £1 billion in annual costs.
The Government will now review how to implement these remaining controls in an improved way. The new Target Operating Model will be based on a better assessment of risk and will harness the power of data and technology. It will be published in the Autumn and the new controls regime will come into force at the end of 2023.
This process will build on existing work already taking place as part of the 2025 Border Strategy, including on the UK Single Trade Window – a new digital platform that will help traders to more easily move goods globally. Our goal is to create a seamless new ‘digital’ border, where technologies and real-time data will cut queues and smooth trade.
The controls introduced in January 2021 on the highest risk imports of animals, animal products, plants and plant products will continue to apply alongside the customs controls which have already been introduced.
Minister for Brexit Opportunities, Jacob Rees-Mogg said:
Today’s decision will allow British businesses to focus on their recovery from the pandemic, navigate global supply chain issues and ensure that new costs are not passed on to consumers.
It’s vital that we have the right import controls regime in place, so we’ll now be working with industry to review these remaining controls so that they best suit the UK’s own interests.
We want the process for importing goods from the EU to be safe, secure and efficient and we want to harness innovative new technologies to streamline processes and reduce frictions. It’s precisely because of Brexit that we’re able to build this UK-focussed system
The UK Government is committed to ensuring the process for importing goods remains safe, secure and efficient and will harness innovative new technologies to streamline future processes and reduce frictions.
Our engagement with industry will be guided by these objectives, and will build on existing work already taking place, including on the UK Single Trade Window – a new digital gateway that will help traders to more easily move goods globally.
John Keefe, Director of Public Affairs. Eurotunnel said:
Eurotunnel supports this decision which will keep goods flowing seamlessly into the UK. It is good for traders as it reduces import declaration paperwork on food and perishables.
It is good for transporters as it increases fluidity at the border and it is good for consumers as it keeps the cost of living down.
Michael Schymik, International Director of SEF Langdon’s said:
The current paper-based SPS processes and procedures are unsuitable in a 21st century digital world.
This change in policy towards a smarter digital border by the UK Government will allow the free flow of safe food products into Great Britain.
The decision may lead to a return of more EU companies exporting to the GB market, increasing competition and ultimately lowering prices for the consumer.
Notes to editors:
Controls no longer being introduced for EU goods July 2022 are:
A requirement for Sanitary and Phytosanitary (SPS) checks currently at destination to be moved to a Border Control Post (BCP)
A requirement for safety and security declarations on EU imports
A requirement for health certification for further SPS imports
A requirement for SPS goods to be presented at a BCP
Prohibitions and restrictions on the import of chilled meats from the EU
