VAT and Duty When Selling to UK Customers

The Mechanism, Not Just the Number

£135 gets described online as a UK 'tax-free threshold,' which is imprecise in a way that can genuinely cost a seller money. What £135 actually governs, per UK government guidance: for non-excise goods, customs duty is waived on a consignment valued at £135 or less. Separately, and this is the part that trips sellers up, £135 also decides who collects VAT and when — below it, the seller is expected to charge UK VAT at the point of sale and remit it to HMRC; above it, the UK recipient generally pays import VAT (and duty) when the parcel arrives.

VAT is owed either way. The threshold doesn't create a VAT-free zone — it just moves the collection point. Getting this backwards (assuming under-£135 orders don't need VAT handled at all) means either under-collecting from HMRC's perspective or leaving your UK customer with an unexpected charge at delivery for tax you should have collected upfront.

Below vs Above £135

	£135 or less	Above £135
Customs duty	Waived (non-excise goods)	Applies, rate depends on HS code and origin
VAT	Seller charges at checkout, remits to HMRC	UK recipient pays import VAT (and duty) on delivery
Excise goods (alcohol, tobacco)	Not covered — duty applies regardless of value	Duty applies regardless of value

Seller's Checklist

✓Register for UK VAT if you sell goods valued at £135 or less directly to UK consumers, so you can charge and remit VAT at checkout — or sell through a marketplace that already handles this as the 'deemed supplier.'

✓Check whether your goods are excise goods (alcohol, tobacco). If so, the £135 duty waiver doesn't apply — duty is due regardless of the order value.

✓Provide a correct commercial invoice with HS code and declared value for orders over £135, so UK import duty and VAT can be assessed correctly at the border.

✓Get a UK EORI number if you're regularly importing into the UK as a business (see the EORI guide linked below) — it's a separate registration from UK VAT.

✓Decide your DDP vs DAP approach for orders over £135: pre-pay the duty and VAT so the customer sees no charge on delivery (DDP), or let the recipient pay at the border (DAP) — be explicit about which one your store uses.

Northern Ireland Is a Separate Question

Northern Ireland sits in a genuinely different position from Great Britain for goods movements, under the post-Brexit Windsor Framework arrangements — broadly, it continues to follow EU single market rules for goods even though it's part of the UK's customs territory. If Northern Ireland addresses are a meaningful part of your UK sales, treat this as a distinct case worth checking separately rather than assuming Great Britain's rules apply identically.

Frequently Asked Questions

Does £135 mean orders under that amount are tax-free?

▾

No. £135 is a customs-duty waiver threshold for non-excise goods, and separately the line between seller-collected VAT (below £135) and border-collected import VAT (above £135). VAT is owed on the sale either way — the threshold changes who collects it, not whether it applies.

Do I need to register for UK VAT to sell to UK customers?

▾

If you're selling goods valued at £135 or less directly to UK consumers (not through a marketplace that handles this for you), yes — you're expected to charge UK VAT at checkout and remit it to HMRC.

Does the £135 rule apply to alcohol or tobacco?

▾

No — excise goods aren't covered by the £135 customs-duty waiver. Duty applies to alcohol and tobacco imports regardless of declared value.

What's the difference between this and shipping to Northern Ireland?

▾

Northern Ireland follows a different set of arrangements under the Windsor Framework, distinct from Great Britain's rules — if you regularly ship there, it's worth checking those specific rules separately rather than assuming they match Great Britain.

VAT and Duty When Selling to UK Customers: A Seller's Checklist