The UK’s ecommerce import VAT and deemed supplier online marketplace changes on 1 January 2021 included the obligation to charge output (sales) VAT on import consignments not exceeding £135 intrinsic value. But how is this £135 threshold calculated? And what if the consignment is made-up of several goods?
The UK £135 threshold mirrors the EU 1 July 2021 €150 import VAT threshold.
How to calculate intrinsic value £135 threshold
Goods located outside of the UK sold to UK consumers are now liable to UK output (sales) VAT if the consignment value does not exceed £135. This is also the UK customs duties threshold, and makes the management of both import taxes simpler and more efficient for HMRC and sellers.
Intrinsic value for import VAT purposes is the cost of the goods excluding:
- Transport and insurance costs if separately listed on the invoice. If they included in the costs as ‘free’ delivery, then the costs are included.
- Any customs taxes and charges
What if there are multiple goods in the consignment?
It is important to understand that the £135 threshold applies to the consignment value. When there are multiple goods in a single consignment being sent to a UK consumer, then their intrinsic value must be added together to determine if the £135 threshold has been crossed.
What if consignment exceeds £135?
VAT at the point-of-sale is not due if the consignment intrinsic value exceeds £135. So a package containing goods with values of: £90; £30; £40 = £160 would be above the threshold and therefore not liable to UK output VAT in the checkout. Import VAT is instead due at the customer clearance point by the importer of record – generally the consumer. This is the same process for all UK consignments exceeding £15 prior to 1 January 2021.
UK Customs authorities will not on the customs declaration that the goods weren’t sold with UK output VAT, and will raise a charge.
Avoiding double taxation on consignments exceeding £135
In the event that goods were sold in the checkout with UK output VAT, but were then packaged in a consignment exceeding £135 and the Customs authority charged import VAT, then the seller, facilitating marketplace and customer may apply for a refund from HMRC.
VAT Calc’s in real-time global Calculator and Auditor services produce instant and accurate UK calculations into your ERP or e-commerce system for compliance with the 2021 UK ecommerce changes. Our VAT Filer, sharing the same platform and transaction data, can then accurately complete UK filings.