Brexit VAT Changes
On January 1st 2021 the UK implemented two important changes to the way goods are imported into the country:
- "Low Value Consignment Relief" (LVCR) was removed
- The shipper must pay all duties and taxes for goods under £135
You can read more about the new regulations at gov.uk.
Low Value Consignment Relief has been removed
The UK has now removed the "Low Value Consignment Relief" on VAT that was being allowed on low value imports under £15.
Now, all goods entering the UK attract VAT no matter their value.
The LVCR existed because it cost more to collect these small taxes than the taxes themselves. Due to the growth of online purchases, in 2021 the EU projects 1 billion low value parcels will be imported, and the LVCR would mean they miss out on €7,000,000,000 in VAT. Both the UK (starting Jan 1st 2021) and EU (starting July 1st 2021) are solving this by requiring sellers to calculate and pay the VAT, rather than the receivers.
Shipper must pay duties and taxes for shipments not exceeding £135
In order to ship any orders under £135, the seller must register with HMRC, appoint and pay a VAT intermediary, collect and remit taxes, and pay all associated ongoing compliance and legal costs.
A second alternative is that the shipper's carrier pays the taxes (this is called DTP "Duties and Taxed Paid" or DDP "Delivered Duty Paid"). Unfortunately our warehouse and carriers cannot currently use any DDP shipping methods. We are working on building a direct relationship with a premium carrier so we can offer this service to UK residents.
What this means to you: We can't ship UK orders valued less than £135 (~USD200) at this time
Due to the time and costs associated with paying UK VAT, combined with our present sales volumes and low margins, it is not a viable option for us to ship any orders under £135 to the UK. For orders over this amount, everything is as it always has been, and the receiver will pay the taxes.
We are not alone in this, and you will now see similar warnings about shipping goods under ~USD200 on many other small and boutique vendors. This will push more money towards big companies that can afford the compliance costs.
Our planned solution is to offer our customers a pre-paid DDP service. This means that at checkout you will pay customs and duties up front, and we will pay the carrier, who pays HMRC.
What's the plan?
We love our UK members, and plan to offer a DDP service in the near future so we can offer low value goods shipments to the UK.
You will pay a surcharge at checkout to cover duties and VAT, and your order will fly straight through customs "pre-paid" with no delays, and no unexpected "box opening fee" or other unanticipated expenses. ETA is sometime during Q3 2021.