Shipping to the UK Has Changed Due to Brexit

Shipping to the UK Has Changed Due to BrexitOn December 31, 2020 the United Kingdom finalized its withdrawal from the European Union. This has impacted the businesses of online retailers that ship products to the UK, since new rules for importing goods and services into Great Britain came into effect starting January 1, 2021.

Since the UK has left the European Union free trade agreements, all its imports and exports now fall under the terms of the World Trade Organization (WTO). This includes changes to the value-added tax (VAT) rules.

Before Brexit, VAT was paid by UK buyers when their parcels entered the country; the WTO rules, however, place the burden of collecting the tax on retailers. In order to deliver orders to the UK, online retailers that ship from the United States or other countries are now required to create an HM Revenue and Customs (HMRC) online account, register for a VAT number, and collect VAT fees from their customers at the time of purchase. VAT return payments must be reported and paid to the HM Revenue and Customs quarterly.

The VAT rate is 20% of the price for goods valued under £135. Online retailers that sell products to UK customers are required to collect the tax at the time of sale; if goods are valued higher than £135, VAT is collected upon import into the UK. Please note that Great Britain has canceled the Low Value Consignment Relief that allowed goods valued under £15 to be tax exempt; such goods are now subject to VAT.

Online retailers shipping goods to the UK should also be aware that all parcel shipments will now take longer to be delivered to customers, since they will be subject to customs clearance and inspections. In order for parcels to be released out of customs, retailers will need to provide declarations and customs invoices showing VAT alongside product prices.