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Brexit regulations for Ecommerce 2021  


After a tumultuous period of uncertainty surrounding the United Kingdom’s exit from the European Union, a post-Brexit trade deal was finally reached, and the UK completed its departure from the EU on January 1st, 2021. 

But what does this mean for the world of ecommerce?  

The new Brexit legislation has increased complexity for retailers and in some cases, customers have received unexpected bills for VAT and customs duty, leading to a poor customer experience. If you sell goods to customers in the UK from another country, including EU countries, there’s a lot to consider.  We’ll explore the changes that have occurred, what you need to do, and how THG Ingenuity can support your business.     

What has changed? 

Value Added Tax 

As of January 1st, 2021, the UK government introduced changes to the Value-Added Tax (VAT) for goods being shipped into the UK. For products being imported into the UK in shipments not exceeding £135 in value, VAT is now charged at the point of sale instead, of at importation. In addition, the Low-Value Consignment Relief has been removed, which previously exempted goods valued at £15 or less.  The new model ensures goods from EU and non-EU countries are treated in the same manner, and that UK businesses are not disadvantaged by competition from VAT-free imports.  

This regulation also works to improve the effectiveness of VAT collection on imported goods and address the problem of overseas sellers failing to pay the right amount of VAT on sales of goods that are already in the UK at the point of sale.  

Shipments coming in to the UK 

Orders worth less than £135 ⮞⮞⮞ The business or customer is responsible for VAT and the order is free of import duty. Sales VAT will be due at the point of sale (i.e. checkout) rather than ‘import VAT’ at the point of importation.  

Orders worth less than £135 where an online marketplace is used to purchase a product or service ⮞⮞⮞ The online marketplace is responsible for VAT.  

Orders worth more than £135 ⮞⮞⮞ The order is liable for customs duties and VAT.  If the business uses an online marketplace to purchase a product or service, the online marketplace is responsible for the fees. Otherwise, the business will have to pay. It is important to keep in mind that the £135 threshold applies to the value of the consignment, not to each individual item within the consignment. 

Shipments sent from the UK to the EU (Jan 1st, 2021 – June 30th, 2021) 

No mandatory VAT collection necessary for orders in this period, as the customer is liable for customs duties and import VAT.  

How do I comply?  

To sell in the UK, businesses will need to make sure they do the following: 

Get a UK VAT Number: All businesses selling goods to UK customers will need to register for a HMRC VAT number. However, B2B businesses do not need to follow this guideline if the UK customer or business provides their VAT registration number.  

All low-value orders shipped to the UK are subject to VAT: All businesses must collect VAT at the point of sale for orders less than £135 in value. For orders over £135, or shipments of multiple goods with a combined value greater than £135, VAT must be paid at the time of import with duty. 

Merchants must remit VAT to HMRC: All VAT gathered by merchants under their registered VAT number must be remitted to the HMRC on a quarterly basis. You must submit a VAT return denoting the amount you collected during this three-month accounting period.  

Our solution 

THG Ingenuity is uniquely positioned to offer a solution to these challenges across technology, logistics and warehousing. With our end-to-end service we cover all aspects from first click to final mile, ensuring oversight and control across the entire buyer journey.  

Our solution covers technical elements, courier solutions and the logistical requirements of the new regulations:    

Checkout duty calculator   

This tool provides accurate calculation of duty at the point of purchase, which allows brands to properly factor in duty costs. 

Seamless customer experience   

Minimising complexity for retailers  

Customs clearance  

Now that more information is required to cross borders, our updated courier manifest ensures a smooth customs clearance process, compliant with post-Brexit regulations.   

Development updates account for changes required of the courier/driver manifests to clear the goods at customs  

Poland Warehouse  

Our European THG distribution centre allows us to dispatch orders from Poland, minimising duty costs.    

Increased warehouse capacity allows us to dispatch orders from Poland  

Minimise duty and VAT 

Need to know more? Get in touch with our team for more information