Online sellers usually charge delivery as a separate line at checkout. For VAT, that line is not a separate service: if the seller is contracted to deliver the goods, the delivery is part of a single supply of delivered goods and takes the same VAT liability as the goods.
Delivery follows the goods
| Goods in the order | VAT on the delivery charge |
|---|---|
| Standard-rated (clothing for adults, electronics) | 20% |
| Zero-rated (books, children’s clothing, most food) | 0% |
| Reduced-rated (children’s car seats, some energy-saving goods) | 5% |
| Exempt or outside-scope items | follows the item |
A bookseller charging £3.95 postage on a book order charges no VAT on the postage. An electronics shop charging £4.99 delivery charges 20% on it.
Mixed baskets
When one order contains goods at different rates, the delivery charge is apportioned between them on a fair and reasonable basis, usually in proportion to the value of the goods at each rate.
An order contains £40 of children’s clothing (zero-rated) and £60 including VAT of adults’ clothing (standard-rated), with a £5 delivery charge:
| Part | Share of delivery | VAT |
|---|---|---|
| Zero-rated goods (40%) | £2.00 | nil |
| Standard-rated goods (60%) | £3.00 | £0.50 (1/6 of £3.00) |
E-commerce platforms often apply one tax class to shipping. Check how the shop is configured. A single “standard rate” shipping setting means VAT is declared on delivery of zero-rated orders that was never due; with VAT-inclusive prices that VAT comes straight out of the seller’s margin, and the customer’s invoice is wrong.
When delivery is a separate supply
If the customer arranges and pays the courier, or the seller acts only as the customer’s agent in arranging delivery and passes the cost on exactly, the delivery is not part of the seller’s supply. This is unusual in retail e-commerce.
Free delivery and delivery thresholds
“Free delivery over £50” does not create a separate supply: the customer simply pays the price of the goods. There is no VAT to account for on the delivery, and the courier cost is a normal business expense.
The cost side
Courier and postage costs paid by the seller are business costs. Royal Mail’s universal service products are exempt from VAT, while most commercial courier services are standard-rated, so check each carrier’s invoice before reclaiming VAT.
Exports
For goods sent outside the UK, delivery is part of the exported supply and normally zero-rated with it, provided export evidence is kept. Goods sent to Northern Ireland follow separate rules.
For mixed-rate products sold as a set rather than mixed baskets, see VAT on mixed-rate bundles; for low-value imports bought by UK customers, VAT on low-value imports.