From 29 March 2019, if the United Kingdom (UK) leaves the European Union (EU) without a deal, the UK import VAT rules will change for goods sold to UK buyers (including businesses and individuals) sent in parcels.
The rules differ depending on the value of the goods in the parcel. When calculating this, sellers outside the UK should include the price paid for all items sold, either in money or any other means. Postage, packaging and insurance costs, or any duty sellers pay in their own country should not be included.
When the value for all goods in the parcel is £135 or less, sellers outside the UK must pay the UK import VAT for any parcels sent to UK buyers after 11pm GMT on 29 March. This applies even if the goods were sold before then. Sellers outside the UK include those in the EU, outside the EU, and the Channel Islands.
The existing tax relief on goods worth £15 or less will not be introduced for sellers within the EU. It will also be removed for sellers outside the EU. The UK government has taken this decision to protect UK retailers from being undercut by VAT free goods entering the market. This also follows the global approach that is being taken with regards to this tax relief.
If the value for all goods in the parcel is more than £135, or if the parcel contains excise goods including alcohol, tobacco or perfume, there will be different rules. UK buyers will need to pay the UK import VAT, customs and / or excise duty on these goods. The parcel operator will apply any necessary charges to the parcel and seek the payment direct from the UK buyer.
If sellers outside the UK sell goods in parcels above and below the £135 threshold to UK buyers, the seller should only report and pay the UK import VAT on the goods in the parcels worth £135 or less.
From 29 March 2019, sellers outside the UK must pay the UK import VAT for any parcels sent to UK buyers after 11pm GMT, even if the goods were sold before this date.
To pay the UK import VAT on parcels, sellers outside the UK can either:
- register for the UK HM Revenue and Customs (HMRC) new online service to report and pay the UK import VAT due, or
- pay a parcel operator that offers a service to pay the UK import VAT to HMRC on the seller’s behalf
Sellers must register for the service if they sell zero-rated goods. Zero-rated goods are still VAT-taxable but the rate of VAT charged is 0%. This is known as zero-rate.Sellers must still submit a report on these goods sold but with zero-rated UK import VAT due.
Sellers can register for the service now so they are ready to use it if the changes are introduced on 29 March 2019.