UK ecommerce VAT works differently depending on where you are based. UK-based sellers must register for VAT once taxable turnover goes over £90,000 in any rolling 12 months, while overseas sellers with no UK establishment must register from their first UK sale, with no threshold. Once registered, you charge VAT (usually 20%), keep digital records and file an HMRC VAT return through Making Tax Digital software, normally every quarter.
Ecommerce VAT decides what your customer really pays, who collects the tax on a £40 parcel from Milan, and whether a late return costs you £200. It also sits right next to your logistics: every shipping label and customs document carries values HMRC can check, and the carriers and sales channels you connect decide how that data moves from order to border. This guide covers the 2026 thresholds, registration, the £135 rule and VAT returns, for UK-based and overseas sellers alike.
VAT is the UK's consumption tax. For online sellers it works like an ecommerce sales tax charged at every step of the chain: you charge VAT on sales, reclaim the VAT on business costs, and pay HMRC the difference. The standard rate is 20%, with a 5% reduced rate and 0% for items such as books and children's clothing. Ecommerce VAT adds two twists: where the goods are when you sell them, and whether a marketplace sits between you and the customer.
Zero-rated sales still count towards your threshold. Product data matters too: the right commodity code decides the import VAT and duty rate on every shipment. In ShippyPro you can assign an HS code to each SKU once, and it is then applied to your shipments automatically, while shipping automation can preassign carriers by destination country.
If you are not VAT registered, you cannot add VAT to prices or invoices. If you do, HMRC can recover every amount you charged as VAT and may also charge a penalty for issuing unauthorised VAT invoices.
The UK VAT registration threshold for 2026 is £90,000 of taxable turnover. It rose from £85,000 in April 2024 and, despite talk of a cut, stays unchanged for 2026/27. According to GOV.UK's register for VAT guidance, you must register if your taxable turnover for the last 12 months goes over £90,000, or if you expect to go over £90,000 in the next 30 days alone.
The 12 months are rolling, not your financial year, so check the total every month. Once you pass it, you have 30 days from the end of that month to register.
| Threshold | Amount (2026/27) | What it means |
|---|---|---|
| Registration (UK-based sellers) | £90,000 | Rolling 12-month taxable turnover that triggers compulsory registration |
| Deregistration | £88,000 | You can apply to leave VAT if you expect turnover to stay below this |
| Overseas sellers (NETPs) | £0 | Register from your first taxable UK sale |
| Low-value consignment | £135 | At or under this value, VAT is charged at the point of sale, not at the border |
It depends on where your business is established. HMRC treats a business with no UK establishment as a non-established taxable person (NETP), and the HMRC VAT Registration Manual on NETPs explains how that interacts with marketplace sales.
Register once rolling taxable turnover passes £90,000. Below that, voluntary registration can still pay off if you buy a lot of stock or sell mainly to businesses, because you can reclaim input VAT.
No threshold. Register from your first taxable UK sale if you hold UK stock (for example in a fulfilment centre) or sell parcels of £135 or less direct to UK consumers. A marketplace may be liable for the VAT on the sale instead, but you still pay import VAT when your stock enters the UK, and registering is how you reclaim it.
Most businesses can register for VAT online. Follow this order:
Add up taxable sales for the last 12 months. Overseas sellers skip this step.
Business details, bank account, turnover figures and a Government Gateway login.
Apply within 30 days of the end of the month you passed the threshold. You charge VAT from your effective date of registration, even if your VAT number has not arrived yet.
Add VAT to prices, show your VAT number on invoices, and link your EORI number to your VAT registration for cross-border shipments.
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For cross-border ecommerce, the consignment value decides who collects VAT and when. The GOV.UK guidance on overseas goods sold directly to UK customers is clear that the £135 limit applies to the total consignment, not to each item in it.
| Scenario | Who accounts for VAT | When |
|---|---|---|
| Consignment £135 or less, sold direct to a UK consumer | The seller (must be UK VAT registered) | At the point of sale |
| Consignment £135 or less, sold through an online marketplace | The marketplace | At the point of sale |
| Consignment over £135 | The importer (seller under DDP, customer under DAP) | Import VAT at the border |
| Goods already in the UK, sold by an overseas seller to a consumer via a marketplace | The marketplace | At the point of sale, any value |
| B2B sale £135 or less, customer gives a UK VAT number | The business customer (reverse charge) | On the customer's VAT return |
Over £135, who pays VAT on imports depends on your Incoterm, as our guide to DDP vs DAP explains. VAT-registered importers can use postponed VAT accounting to declare import VAT on their return instead of paying at the border.
UK VAT ecommerce news for 2026: the £135 customs duty relief for low-value imports is being removed. Draft legislation was published in July 2026, and duty will apply by October 2028 at the latest, according to the GOV.UK policy paper on low-value imports. Import VAT rules stay the same, but sellers and marketplaces will account for duty and share item-level data with HMRC.
Once registered, you file an HMRC VAT return for each VAT period, usually quarterly. Under Making Tax Digital (MTD), every VAT-registered business keeps digital records and files through MTD-compatible software, whatever its turnover, unless HMRC has granted an exemption.
The deadline for both filing and paying is one calendar month and seven days after the end of the VAT period. For a quarter ending 30 September, that means 7 November. Of the nine boxes, online sellers mostly work with Box 1 (VAT due on sales), Box 4 (VAT reclaimed on purchases), Box 5 (net VAT to pay or reclaim) and Box 6 (total sales excluding VAT).
Late returns, including nil returns, earn penalty points. Quarterly filers who reach four points pay £200, plus £200 for every late return after that. Late payment penalties and interest apply separately.
Customs values, commercial invoices and C79 import VAT certificates should match your VAT return. In ShippyPro you can add your VAT number and EORI to your profile settings for international shipments, customs documents are created automatically when a shipment requires them, and you can upload your own commercial invoice as a paperless document for carriers that support it.
| Mistake | What happens | How to avoid it |
|---|---|---|
| Checking turnover by financial year | You miss the rolling 12-month trigger and register late | Check the rolling total at the end of every month |
| Assuming overseas sellers get the £90,000 threshold | Unregistered sales and back-dated VAT | Register as a NETP before your first UK sale |
| Applying £135 per item, not per consignment | Wrong VAT treatment on multi-item orders | Base the check on the total order value |
| Using the wrong commodity code | Wrong import VAT or duty, and possible HMRC demands | Check codes on the UK Trade Tariff |
Selling into several countries? Specialist ecommerce VAT services can handle registration and filing while you keep your shipping data clean.
The threshold is £90,000 of taxable turnover over any rolling 12 months, unchanged for 2026/27. The deregistration threshold is £88,000. Overseas sellers with no UK establishment have no threshold.
Usually, yes. If you hold UK stock or sell parcels of £135 or less direct to UK consumers, you must register from your first sale. Marketplaces may account for the VAT on the sale, but you still pay import VAT on stock you bring into the UK, and registering lets you reclaim it.
VAT is charged at checkout, not at the border: by the seller on direct sales, or by the marketplace on marketplace sales. The limit applies to the whole consignment.
Your return and payment are due one calendar month and seven days after your VAT period ends. You must file through Making Tax Digital compatible software.
No. UK businesses selling digital services to EU consumers can use the EU's non-Union One Stop Shop (OSS) to file a single EU return.
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How to get, check and use GB, XI and EU EORI numbers for customs.
Read more →The difference between 6-digit HS codes and 10-digit UK commodity codes.
Read more →Choose the right Incoterm for cross-border ecommerce and avoid refused parcels.
Read more →Reports, guides and papers on international shipping and ecommerce logistics.
Browse resources →Connect your carriers and sales channels, then create labels and customs documents in one place. Start your free 14-day trial, no credit card needed.