A few weeks ago we hosted a webinar with our partner, Passport Shipping, to discuss major changes occurring at the beginning of the year for DTC brands that sell and ship to the UK. This change is the introduction of a new VAT (value-added-tax) model for cross-border goods which requires all eCommerce merchants that ship to the UK to register for a VAT number by January 1, 2021.
The new VAT model for cross-border goods coincides with the end of the Brexit transition period. However, the good news is these changes are in line with similar VAT changes that the EU is moving forward with on July 1, 2021.
Official details from the UK government here.
Here is a summary of the changes:
- All brands shipping to UK consumers have to register for a UK VAT number by January 1, 2021
- Brands have to include their UK VAT number in the shipment to the UK customer
- For orders under £135, the brand is responsible for collecting and remitting the VAT to the UK government
- For orders over £135, it is business as usual and the shipping company is responsible for paying VAT as part of the import, customs clearance process
- The UK Government is removing the current de minimis of £15 and will require VAT on every order entering the country
What the changes mean for you:
- Sellers are now the responsible party for collecting and remitting VAT for orders under £135. Orders above £135, it is business as usual (with DDU, the UK consumer is responsible for payment, and with DDP, the shipping company is responsible for the payment)
- All eCommerce merchants must register for a UK VAT number by end of the year in order to ship any packages to UK consumers in a compliant manner.
- The UK Government will be issuing late penalties for late registration.
- The UK Government is removing the current de minimis of £15 and will require VAT on every order entering the country
This process can seem daunting for those who are just starting the registration steps (or hearing about this for the first time). To help with this process, we’re listing two resources from our partner, Passport Shipping, for your brand to utilize.
- For easy UK VAT registration, you use this link to Passport Shipping’s UK VAT registration page. The registration layout is user friendly, and a Passport team member will help you with the process.
- For frequently asked questions regarding the changes, check out this link on Passport Shipping’s website.
- Looking for a 3PL to help improve domestic and global shipping for your brand? Schedule a call with OceanX to learn how we can help.
