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Shoppers Will Pay 20% VAT on All International Online Purchases from Jan 2021

In the News

Shoppers will pay 20% VAT on all international online purchases from January 2021.

An HM Revenue and Customs (HMRC) policy paper, released earlier this week, confirmed that Low Value Consignment Relief will end on all imports into the UK once Britain leaves the European Union (EU) on January 1, 2021.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says the paper confirms VAT exemption ends on all VAT eligible imported goods valued at £15 or less next year. Previously, such items had escaped the tax.

The change is happening at the exact time many overseas sellers are being forced to register for VAT in the UK, which he says will drastically reduce the number of online retailers wanting to sell to Brits.

David said: “VAT is currently waived on any item under £15 (or 22 Euro) entering the UK from outside the EU. This saves red tape and annoying extra charges on low-value items.

“After Brexit, the changes mean that there will be VAT to pay on all applicable EU and overseas sales to the UK, charged at the UK VAT rate (currently 20%)."

But, what does that mean for UK online shoppers?

“Put bluntly, it means that an item that now costs £14.99 will cost £17.98 from 1 January because of the extra 20% VAT. We’ll all be paying up to around £3 more on every international purchase,” David warned.

The HMRC paper, “Changes to VAT treatment of overseas goods sold to customers from 1 January 2021,” also states that all international sellers will be responsible for charging and collecting the UK VAT on all items under £135.

That means overseas sellers will be required to register and account for the VAT to HMRC unless they use an online marketplace.

If they do sell through a marketplace, for example Amazon or eBay, the marketplace will be responsible for collecting and accounting for the VAT.

David added: “To compound the problem, Amazon is also insisting that from 1 January, EU and international sellers such as American or Chinese merchants selling items to both British and EU shoppers will have to split their stock and hold some in Amazon’s UK warehouses. That involves significant new transport costs and red tape for overseas sellers.”

The costs involved in these changes may well reduce the choice and increase the cost of items available to UK buyers in the future, warns ParcelHero.

ivenailedit
14 days ago
What do you think of this?
BonzoBanana
BonzoBanana13 days ago

Obviously bad for the consumer with regard value but good for the UK economy where this VAT exemption has made it harder to sell such items retailing in the UK. China does some crafty stuff like offer free postage to Chinese firms and under the international postal agreement the Royal Mail is responsible for delivering such items from UK ports to the end address in the UK so the post office is basically delivering Chinese goods for free. The Chinese government is unfairly subsidising their postal service in order to maximise exports. Lets also not forget previously while we were in the EU all sales tax apart from something like a 10% handling fee was paid to the EU rather than our own treasury. This is an often overlooked damaging part of being part of the EU and probably has cost us far more than direct sales from China. I assume this will end too or at least hope it will unless that is still up for negotiation. I hope this isn't something that will continue. It may be beneficial to have zero tariff trading with the EU but it certainly isn't beneficial to send them the majority of sales tax. Sales tax should be charged on all items imported from the EU and our goods should have sales tax placed on them in the countries they are exported to. This is the fair way of doing it.

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ivenailedit
ivenailedit
Original Poster
13 days ago

Wow, just wow BonzoBanana you are very knowledgeable. Was concerned as like lower prices for goods from abroad, but if it‘s going to be beneficial to UK manufacturers, then it‘s positive

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BonzoBanana
BonzoBanana12 days ago

ivenailedit I think I learnt about how the Chinese sneakily subsidise postage for exports from Serpentza on youtube and how sales tax on goods exported to the EU and imported from the EU both are paid mainly to the EU treasury from the Pedelecs forum as there is a ebike manufacturer there that has to deal with such sales tax. Only products that retail and sell to the UK exclusively have 100% sales tax to our own treasury. I'm surprised myself I had to find out this important information from quite minor sources and that the information is not more widespread. However I don't have a tv license and so don't view live news channels so maybe it is available but I certainly haven't seen it on any news websites.

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ivenailedit
ivenailedit
Original Poster
12 days ago

BonzoBanana certainly do not remember any of the info you’ve shared on TV etc. They know we only care about cheaper goods & not the background info

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Lynibis
Lynibis13 days ago

Just a heads up for the future but there was a discussion on here recently where it was confirmed by LD that topics that are cut and paste are not allowed.

A snippet with your own comment is fine but the whole topic isn't.

I hope you don't mind me pointing this out, no offence is intended, but it may save you having your topics reported if you know this.

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ivenailedit
ivenailedit
Original Poster
13 days ago

Thanks for advice Lynibis. I used to post link, but then realised that commenters hadn’t read info, hence cut & paste job.

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