New Rules for VAT on Low Value Goods Imports

New Rules for VAT on Low Value Goods Imports

February 09, 2021

New rules were expected at the end of the Brexit transition period. And the same are clear now. Till Dec 2020 tax relief was there on import VAT if the amount was under £15. This was known as LVCR - Low-Value Consignment Relief. No import VAT was to be paid if you imported goods from EU (known as acquisition then) under £15.

There is no Low-Value Consignment Relief now. LVCR has been withdrawn with effect from 1 January 2021.

The low value import threshold for UK businesses is now £135.

Low Value Imports to B2C

If the goods are sold to the end user, new rules for VAT on shipments from the 1st January 2021 are as below.

Goods under £135

  • VAT at the point of sale
  • - Consumers pay VAT at the point of sale means at the time the seller is selling making the seller responsible for charging UK VAT.
  • Sellers to register for UK VAT
  • - This might make some sellers less interested in shipping to UK as the seller needs to register for UK VAT.
  • - The goods can enter UK only if the customs invoice shows UK VAT has been paid.
  • - It adds to the work of the sellers if they sell to UK Consumers.

Goods over £135.

  • VAT at border
  • - UK customers will not pay VAT at the point-of-sale
  • - The customer will pay import VAT and duty at the border as usual
  • Sellers need not register for UK VAT
  • - The seller won’t have to register for UK VAT
  • - They won’t need to show VAT on the customs invoice
  • - But it must show on customs invoice that the shipment’s value is higher than the £135 threshold

Low Value Imports to B2B

No VAT is to be charged

If goods under £ 135 are sold to UK businesses by a business overseas, no VAT needs to be charged.

Paying the VAT

  • - VAT registered businesses can account for VAT as a reverse charge on their VAT return
  • - Businesses not registered for VAT can pay the import VAT at the border

Online Marketplace

  • - VAT on imports bought through an online marketplace like Amazon will be paid at the point-of-sale
  • - The marketplace must register for UK VAT
  • - The individual seller using the platform need not register for UK VAT

The above applies to both B2B and B2C sales. Thus, the rules are not different in case of imports through an online marketplace. However, for convenience the seller can print customs invoices, showing that the VAT has already been paid by the customer. Many online marketplaces provide this option which saves time at the border.

VAT accounting can be complex and tiring if the rules are not known. If HMRC do not get VAT return on time, it may levy penalty. The same applies for late VAT registration. However, we are there to assist for all VAT services. Contact us for VAT registration or to file VAT return on HMRC. We provide all services under one roof at a fixed fee.