New UK VAT on eCommerce legislation to come into effect on January 1, 2021

The UK will formally be leaving the EU’s Single Market and Customs Union on January 1, 2021 (“Brexit”). From this date, the UK is set to introduce a new set of VAT rules which may change the way that VAT is accounted for on your sales to UK customers.

Starting January 1, 2021, Amazon will be responsible for collecting UK VAT on the following sales of goods delivered to customers in the UK where ordered through any Amazon storefront:

  1. Goods delivered from inventory stored outside the UK with a shipment value of up to £135; and
  2. Goods delivered from inventory stored in the UK, irrespective of value, where you, the selling partner, are not established in the UK.

Where either of these supplies take place, Amazon will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. You will not receive the UK VAT amount in your disbursements and will not be required to remit these amounts to the UK Tax Authorities.

Please note that the current VAT exemption for sales of goods under £15, where goods are delivered to UK customers from inventory stored outside of the UK, will also be removed from January 1, 2021 – UK VAT will be calculated and collected by Amazon on these sales irrespective of their value.

Retailers will remain responsible for accounting for any UK VAT on any other supplies including supplies to UK VAT registered business customers.

Please read the following information regarding this change and the implications for your business.

Further information on this law is available from the UK Tax Authorities here.