The U.K. is making several changes to ecommerce and marketplace rules starting January 1, 2021.
On January 1, 2021, U.K. business-to-customer ecommerce reforms will include:
- All imported goods purchased will be subject to value-added tax (VAT). This ends the current £15 (about $20) VAT exemption thresholds known as Low-Value Consignment Stock relief.
- Foreign sellers will now have to collect U.K. import VAT at the time of checkout for consignments not exceeding £135 (about $180). Non-U.K. based businesses will need to register in the U.K. so they can make proper customs clearance declarations before shipments will be let into the country. They'll also then have to report and pay the VAT collected at the checkout in quarterly U.K. VAT returns.
See the Resolution section below for steps you need to take.
If you meet the criteria above in the Overview section, you may need to take the following actions:
- You must be VAT-registered in the U.K. and have an Economic Operators Registration and Identification number (EORI number). See specific information here.
NOTE: If you don't have a VAT ID and EORI number on January 1, 2021, you’ll be unable to clear your goods through U.K. customs. This will result in your customers not receiving their goods. Also note that VAT registration may take at least 4-6 weeks.
- Once you are VAT-registered in the U.K. and have an EORI number (Step 1), you need to go into AvaTax and select U.K in your nexus settings so Avalara knows to begin calculating VAT. For information on updating your nexus settings, see Update where you collect and pay tax. Please ensure that your Importer of Record and VAT ID for the U.K. is recorded when updating your settings.