Goods imported into Great Britain in consignments with an intrinsic value of £135 or less are not charged import VAT at the border. Instead, VAT is charged at the point of sale, as if the goods were sold in the UK. The rule is designed to stop low-value parcels slipping into the UK without VAT, and it decides who must register and who pays.
Who accounts for the VAT
| How the sale is made | Who charges and pays UK VAT |
|---|---|
| Through an online marketplace | the marketplace, as deemed supplier |
| Directly by an overseas seller to a UK consumer | the seller, which must register for UK VAT |
| Directly by an overseas seller to a UK VAT-registered business that gives its VAT number | the business customer, under the reverse charge |
Consignment value is the value of the goods themselves, excluding transport and insurance. Above £135, the normal import rules apply: import VAT and any duty at the border, with postponed VAT accounting available to VAT-registered importers.
Marketplace sales
When an overseas seller sells through an online marketplace, the marketplace charges UK VAT to the customer and pays it to HMRC. The seller’s own sale to the marketplace is treated as zero-rated. Sellers should keep the marketplace’s VAT reports, because they explain why no VAT appears on those sales in the seller’s records.
UK businesses buying low-value goods from abroad
A UK VAT-registered business buying goods worth £135 or less from an overseas seller should give its VAT registration number. The seller then does not charge VAT, and the business accounts for it under the reverse charge on its VAT return: output VAT in box 1 and, if fully taxable, the same amount as input VAT in box 4. If the business does not give its number and is charged UK VAT, it can reclaim it with a valid VAT invoice.
A café orders £120 of crockery from a non-UK online shop and provides its VAT number:
| Account | Debit | Credit |
|---|---|---|
| Equipment and crockery | £120 | |
| Input VAT (reverse charge) | £24 | |
| Output VAT (reverse charge) | £24 | |
| Card clearing | £120 |
Sellers based in the UK
UK sellers sending goods to UK customers from UK stock are not affected. A UK seller shipping goods from an overseas warehouse directly to UK customers in consignments of £135 or less is, and must charge UK VAT at the point of sale (or rely on the marketplace if one is involved).
Customs duty still applies separately
The £135 rule is about VAT. Customs duty on consignments is a separate question, with its own relief for low-value goods, and gifts between individuals have their own allowances. Check the rules for the specific goods.
Northern Ireland
Goods moving into Northern Ireland follow different rules for many purposes. Sellers with customers there should check them separately.
HMRC’s guidance on VAT and overseas goods sold to customers in the UK sets out the details. For marketplace and dropshipping models, see VAT on dropshipping and marketplaces.