Brexit and US Sellers: How Sales to the UK Changed?
An hour before this new year, at 23:00 GMT, the UK officially left the European Union, the transition period ended, and new economic relations rules came into force. So far, everything is going according to plan, but who knows what will happen in the future?
How It All Began
In 1921, the United Kingdom and Northern Ireland signed a peace treaty that marked the beginning of an independent life for the latter. As a result, the parties established the border between the Republic of Ireland and Northern Ireland which remained part of Great Britain.
Much later, Great Britain tried more than once to become a member of the then European Economic Community but did not succeed in this. It wasn’t until 1973 that the membership application was finally approved. This is how the United Kingdom became a new European Union member.
Until 2016, various votes and citizen polls each time ended up with the UK remaining in the EU. But a referendum held in 2016 clarified the membership situation. As a result, the government intended to stop playing by the Union’s rules and made a final decision that shocked many people – to leave the EU.
What Does Brexit Mean for US Sellers
Brexit also entailed new tax requirements for those who want to sell their goods from the United States to both the UK and Northern Ireland (NI). Now, goods crossing the UK border will be subject to taxes such as import VAT, excise duty, and customs duty. Now, if you want to sell your goods to the UK, you need to register for VAT as soon as possible and also get an EORI number.
However, many benefits are still available for NI providers. While this is good news for other countries, UK-NI and NI-UK sellers will now face different taxes as well.
US retailers selling their goods in the UK need to collect VAT at the point of sale. This only applies to products that cost less than $180. And yes, even goods under $20 are now taxed as well. If the product costs more than $180, then, as it was before, the tax is levied when crossing the UK border.
But such requirements apply not only to retailers but also to various online trading platforms that sell their goods to the UK. However, the situation here is a little more complicated. You should consider if the seller is a UK resident or not and if the goods are sold from the UK or another country.
For example, the seller himself may be located in the United States but his goods are stored in the UK, respectively, he sells within this country. Either way, this seller is considered a supplier from abroad, and his goods are subject to taxation.
VAT collection at checkout, VAT remittance to HMRC and transaction documenting applies to items shipped from overseas with a shipping cost of $180 or less.
It is much easier for e-commerce platforms that sell their goods indirectly (that is, sell goods through the marketplace and do not store them in the UK) – they do not need to pay taxes.
