Find out how to pay import VAT on goods you sell and send to UK buyers if you are based outside the UK, in a no deal Brexit.
If you are based outside the UK and sell parcels to UK buyers worth £135 or less, you must pay import VAT. Parcels include letters, packages, packets and any other article that could be sent by post, even if they are sent by different methods.
To pay import VAT you can either:
- register with HM Revenue and Customs (HMRC) to report and pay the import VAT due yourself
- pay a parcel operator that offers a service to pay import VAT to HMRC on your behalf
Who should register
You can register to pay import VAT if you:
- are based outside the UK - this includes the EU, outside of the EU and the Channel Islands
- intend to sell goods worth £135 or less (not including shipping, insurance and incidental costs) to UK buyers after Brexit
- choose to pay the import VAT yourself and not to a parcel operator
You can register with HMRC before you need to start paying import VAT on parcels.
HMRC may refuse to register you if we have evidence that you have not met registration rules.
If you do not register with HMRC or pay import VAT to a parcel operator, you may find:
- your parcels are delayed or stopped from entering the UK
- the UK buyer may have to pay additional tax and fees
- you have to pay a penalty of £1,000
You must still register if you sell zero-rated goods. Zero-rated goods are still VAT-taxable but the rate of VAT charged is 0%.
You can check online to see if you will need to register with HMRC to pay import VAT on the goods you sell.
Who should not register
Do not register if any of the following apply:
- all goods you sell to UK buyers are worth more than £135 (not including shipping, insurance and incidental costs)
- if you have to pay excise duty on all the goods you sell (for example, alcohol and tobacco)
- your business is based in the UK or is considered to have a ‘UK footprint’ - for example, if you employ or sub-contract people in the UK to sell all your goods worth £135 or less to UK buyers
- you are sending a gift
- you pay a parcel operator that offers a service to pay import VAT to HMRC on your behalf
- the goods are sent to the UK under customs special procedures (for example, temporary admission and transit procedures)
You must keep records as evidence of any agreement you have with a parcel operator to pay import VAT on your behalf for 6 years from the date the parcels are posted.
If you are based in the Channel Islands and choose to pay import VAT to your parcel operator, you can either:
- pay the import VAT to your national parcel operator - Jersey Post and Guernsey Post have agreements with HMRC to pay the import VAT on your behalf
- pay the import VAT to a parcel operator with an agreement in place that their carrier will pay HMRC
What you need to know if you choose to register
If you choose to use the import VAT on parcels service you will need to:
- register for the service online
- choose an accounting period from those available
- submit import VAT reports for parcels
- pay HMRC the import VAT for the accounting period
- keep records of the number of parcels worth £135 or less you sell to the UK for each accounting period
How to submit import VAT reports for parcels
You must submit a report for the parcels you send to UK buyers using the online service for each accounting period. This will normally be every 3 months. You can choose when to report and pay import VAT when you register with HMRC, but once chosen you cannot change this date.
You must submit your report to HMRC within one month and one day of the end of the accounting period. For example, if the end date of your accounting period is 30 April 2020, you must submit your report to HMRC by 1 June 2020.
How to pay HMRC
You must sign in to the online service to pay the import VAT due in pounds and pence by any of the following:
- corporate credit card
- debit card
- bank transfer
You must pay the import VAT using the online service, and HMRC must receive the funds by the due date.
How to amend an import VAT report
If you make an error in an import VAT report, you must correct it in the next accounting period report.
- keep details about the inaccuracy - for example the date it was discovered, how it happened, the amount of import VAT involved
- include the value of the inaccuracy in your import VAT account
If the parcels you send to the UK are returned to you and you have paid import VAT to HMRC, you can adjust your next report to reduce the amount of import VAT payable.
If you pay import VAT to the parcel operator and the parcels are returned to you, the parcel operator is responsible for providing a refund to you.
How to claim a refund
If you will not be sending another report and need to claim a refund, contact HMRC using form C&E1179.
You must claim a refund within 4 years from the end of the accounting period in which the error was made.
You must keep records for 6 years from the date the parcels were posted.
You must also be able to send the records by email if we ask to see them. You must do this within 30 days of the request.
For each accounting period, records must include the:
- number of parcels worth £135 or less you sold
- total value of all the parcels worth £135 or less you sell to the UK, including shipping and insurance costs in pounds and pence, for each accounting period
- rate and amount of import VAT for all parcels sent to UK buyers
- UK buyer’s name, address and email address
How to register
You must register online if you choose to report and pay import VAT on parcels yourself.
To register you will need:
- your business’s contact details - this includes your trading name (if different to your company name), a contact name, address, telephone number and email for your business
- the details of your business accounting periods
What happens after you register
You will be given an import VAT on parcels reference.
The parcels reference is a combination of letters and numbers. It must be included in any documentation such as a customs declaration form (CN23) or airway bill that accompanies any parcels you send to UK buyers after Brexit. This is so parcel operators can identify that you have registered and can deliver your parcels without any delays.
HMRC will receive data about parcels that are entering the UK. Parcels without the correct parcels reference may be delayed.
If you change any of your registered details, you must tell HMRC using the online service within 30 days.
Your registration can be cancelled by HMRC if we have evidence that you:
- no longer intend to sell parcels worth £135 or less to UK buyers
- are not complying with the import VAT rules
How to work out import VAT due
Work out the value of the goods in pounds and pence by using the foreign currency exchange rate that applies at the time of the sale. HMRC publishes exchange rates on a monthly basis.
1. Work out the value of each item in your parcel
The total value of a parcel is the total price paid by the customer for the goods.
The total value does not include any duty you pay for the goods in your own country.
2. Find the right rate of import VAT to use
The rate of import VAT charged depends on what the item is.
You have to pay a standard rate of import VAT on most items. This is currently 20% of its value.
Some goods are charged at a reduced rate. These include items such as children’s car seats. The reduced rate is currently 5% of the value of your goods.
There are also goods that are still VAT-taxable but the rate of import VAT is 0%. This is known as zero-rate. You must still submit a report even if no import VAT is due.
Examples of this include most food and children’s clothes.
3. Calculate the import VAT you will need to pay
Import VAT is charged as a percentage of each item in your parcel. It is calculated on the cost of the goods plus shipping, insurance and incidental costs.
- Add the amounts calculated for your items together.
- Use the import VAT rate that applies to each of the goods in your parcel.
- Multiply the value of your item by the correct import VAT percentage rate.
If a parcel contains goods with multiple import VAT rates, HMRC would expect a fair and reasonable payment for each of the shipping, insurance and incidental costs to the appropriate import VAT rates.
If you sell on an online marketplace
If you do not pay the import VAT due and you sell on an online marketplace, HMRC can hold you and the online marketplace jointly and severally liable for the import VAT you owe, after sending you a notice of non- compliance.
Online marketplaces may also be asked by HMRC to provide information to help with our compliance checks.
If you sell to a UK VAT-registered business
You may need to provide VAT-registered UK buyers with an invoice showing the import VAT amount. This is so they have the information they need to reclaim the import VAT they have been charged.
If you send goods to the UK for onward sale
If you send goods to the UK to be stored before they are sold to UK buyers, you will still need to comply with existing customs controls and VAT rules. This includes paying any Import Duty and compliance with UK domestic VAT obligations. These are detailed in VAT Notice 700/1: who should register for VAT.