Following the UK’s transition out of the European Union, the UK introduced new tax changes that came into force on 1st January 2021.
Businesses in the EU, importing into the UK, will now have to comply with additional laws and may face higher costs. This change has led to some EU businesses stating they will ship to every country besides the UK. A number of businesses have already temporarily paused shipping to the UK, with uncertainty of when shipping will resume.
Businesses importing into the UK must now adhere to new VAT rules introduced by HMRC on 1st January 2021. The new VAT model ensures that all imports are treated the same and that UK businesses are not negatively affected by VAT-free imports.
VAT is now collected at the point of sale rather than point of importation. Overseas retailers selling goods to the UK must now register for UK VAT. UK VAT supply will apply to imported goods from outside the UK in consignments that do not exceed the value of £135.
HMRC are working to tackle tax evasion from those businesses who are not registered for UK VAT. This comes after reports of how international online shopping has led to VAT evasion on a large scale.
