How much is UK VAT on ecommerce? A foreign seller guide

UK VAT on ecommerce is normally 20%, but qualifying products can carry 5% or 0%. As checked on 1 November 2026, the amount depends on the product, while responsibility for accounting for it depends on the seller, stock location and sales channel. A £60 VAT-inclusive sale at 20% contains £10 VAT, not £12.

Updated November 2026. This guide covers physical consumer goods sold into Great Britain, meaning England, Scotland and Wales. Northern Ireland has separate goods rules. It explains public HMRC rules, not the tax treatment of an individual CRSSBRDR arrangement.

What should foreign sellers know before setting UK prices?

• The standard rate is 20%, not a special ecommerce rate. Confirm each product's classification before pricing.

• VAT inside a consumer price is not the same as VAT added to a net price. At 20%, divide the VAT-inclusive price by 1.2 to find the net amount.

• The £135 imported-consignment rule changes how VAT is collected. It does not make ordinary consumer purchases VAT-free.

• Direct sales and qualifying marketplace sales can have different parties responsible for VAT. Document the actual trading model before launch.

These distinctions follow HMRC's VAT rates, pricing guidance and overseas marketplace guidance, checked on 1 November 2026.

The commercial risk is straightforward: a brand can hit its sales target and still miss its margin if it treats tax-inclusive takings as available revenue. Solve the VAT route before you approve a UK retail price or creator offer.

Is UK VAT always 20% on ecommerce products?

No. HMRC lists a 20% standard rate, a 5% reduced rate and a 0% zero rate. The product and qualifying conditions determine the rate, not whether the order comes through a website or a shopping app.

HMRC's rates page, checked on 1 November 2026, gives children's car seats as a reduced-rate example, and most food and children's clothes as zero-rate examples. Those are category examples, not permission to classify every related product the same way.

An online shop can contain products with different rates. Build a product-level VAT record rather than assigning one rate to the entire catalogue. Record the product description, the supporting HMRC classification and who approved it.

Zero-rated and exempt are not interchangeable. HMRC distinguishes them in its rates guidance. Do not put an item into an exempt category simply because the checkout charges no VAT; the reporting and recovery consequences need separate checking.

If your finance team cannot support a reduced or zero rate with the relevant conditions, resolve that classification before launch. A competitor's product listing is not tax evidence.

How do you calculate VAT inside a UK retail price?

For a standard-rated product, divide a VAT-inclusive price by 1.2 to get the VAT-exclusive amount. Subtract that net amount from the gross price to find the VAT included. These are the formulas in HMRC's charging VAT guidance, checked on 1 November 2026.

Here is an illustrative worked example, not a customer result or service quote. Assume a standard-rated item sells for £60 including VAT. The net sale is £50 and the VAT is £10. If you instead start with a £60 net price, adding 20% produces a £72 gross price containing £12 VAT.

That distinction matters when a US or EU brand carries its existing retail price into a UK margin model. The number the shopper pays is not automatically the amount available to fund stock, fulfilment, platform charges and growth.

For the £60 gross example, £50 is revenue before those other costs. It is not profit. Do not describe the £10 VAT component as a platform fee or assume that a marketplace payout already equals VAT-exclusive sales.

When someone asks, "how much is UK VAT on ecommerce?", the practical follow-up is: are you starting with a net price or a consumer-facing gross price? Put both in the launch model and label them clearly.

What does the £135 rule actually change?

For qualifying non-excise consumer consignments outside the UK at sale and sent into Great Britain, a value of £135 or less generally brings VAT collection to the point of sale. Above £135, normal import VAT and customs rules apply. HMRC's direct-sales guidance, last updated 13 May 2022 and checked on 1 November 2026, sets out the distinction.

The test is the total consignment's intrinsic value, not each individual item's price. HMRC says to exclude separately shown transport and insurance costs and other identifiable taxes and charges when determining that value, subject to its stated conditions.

For illustration, two items with an intrinsic value of £80 each, sent together in one consignment, total £160. Treating each item as a separate £80 test would produce the wrong route. The example assumes the items travel together and that no special exception applies.

Do not read £135 as a general VAT allowance or a promise that an order has no customs consequences. Excise goods, business customers providing a UK VAT number and Northern Ireland transactions need their own checks.

For a brand importing stock in bulk before selling locally, the later consumer order is a different event from the original import. A low retail basket value does not erase the obligations on that earlier shipment.

Who accounts for VAT on direct sales from overseas?

For qualifying consignments worth £135 or less sent from outside the UK directly to consumers in Great Britain, HMRC says the seller must charge and account for VAT at the point of sale. Its direct-sales guidance, checked on 1 November 2026, also requires registration for that route, subject to the stated exceptions.

If an overseas seller owns goods already in the UK and sells them directly to customers, HMRC says that seller must register and account for VAT. Do not assume a fulfilment provider becomes the seller merely because it stores and dispatches the stock.

There are specific rules for zero-rated-only supplies and qualifying business-to-business sales. That is why "every foreign seller must register in exactly the same way" is not a useful launch instruction.

Start with the factual chain: who owns the goods, where are they at sale, who is the customer and which business makes the supply? Then confirm the registration and checkout treatment. For a deeper registration discussion, see our UK VAT registration guide for foreign companies.

Does a marketplace account for VAT instead of the seller?

Sometimes. For qualifying overseas-goods consignments worth £135 or less, HMRC makes the online marketplace responsible for point-of-sale VAT. It also assigns marketplace responsibility for relevant consumer sales of UK-located goods by a seller not established in the UK. See HMRC's marketplace guidance, checked on 1 November 2026.

For UK-located stock under that overseas-seller model, the guidance describes a zero-rated deemed supply from the seller to the marketplace. The overseas seller remains responsible for import VAT and Customs Duty when the goods first enter the UK. Marketplace collection at checkout does not settle that earlier import event.

HMRC says overseas sellers making only zero-rated deemed supplies can register or apply for exemption from registration. Recovery of import VAT depends on the normal input-tax rules. Do not turn that into either a blanket registration requirement or a blanket exemption.

A shopping platform, a payment processor and a merchant of record are not interchangeable labels. HMRC's marketplace definition has specific conditions. A brand using a UK merchant of record must have its actual seller and supply chain assessed; it cannot copy the tax settings of a non-established seller selling its own UK stock.

For a TikTok Shop launch, confirm the registered seller, stock owner and relevant order-level tax records with the finance lead. Platform onboarding and the VAT analysis need to describe the same business arrangement.

Do foreign brands get the £90,000 registration threshold?

Not automatically. HMRC's registration guidance, checked on 1 November 2026, sets out the £90,000 threshold and separate rules for non-established taxable persons. An overseas brand should not treat that threshold as a universal period of tax-free UK trading.

Direct sales, marketplace deemed supplies and a UK trading entity can produce different registration questions. Establish the supply chain before relying on a turnover test. Registration status and the rate applicable to the product are separate decisions.

For US founders, our UK VAT registration guide for US companies covers the registration questions in more depth. This article focuses on the amount inside the selling price and who accounts for it.

What should go into a UK VAT launch sign-off?

Use this original CRSSBRDR launch checklist to join the tax analysis to the commercial model. It is an operational synthesis of the HMRC sources checked on 1 November 2026, not an HMRC form or an individual tax opinion.

Product rate: finance owner. Record the rate and the product-specific supporting source. Approval evidence is a SKU-level classification, not a shop-wide default.

Consumer price: commercial owner. Show gross price, net price and VAT separately. Approval evidence is a checked margin model using the correct inclusive-price calculation.

Stock route: logistics owner. Record whether the goods are outside the UK or already in Great Britain at sale. Approval evidence is the planned movement and ownership record.

Consignment test: logistics and finance owners. Where relevant, test the whole imported consignment against £135. Approval evidence is the value calculation with its inclusions and exclusions.

Seller and channel: finance owner. Identify the legal seller and whether marketplace deemed-supplier rules apply. Approval evidence is a documented supply chain matched to account settings.

Import and settlement records: finance owner. Keep import VAT evidence separate from checkout VAT and platform deductions. Approval evidence is a reconciliation showing where each amount belongs.

The launch gate should be simple: an unresolved line has an owner and stays unresolved until the evidence is supplied. A warehouse booking or approved creator campaign is not a substitute for that sign-off.

How does CRSSBRDR fit into the launch sequence?

CRSSBRDR™ is the only MoR built by a licensed accountant and a founding TikTok Shop Partner agency. We get US and EU brands live on TikTok Shop UK in 7 to 10 business days. £100M+ in ecommerce sales driven. Compliance built in, growth switched on.

Those are CRSSBRDR's published positioning and launch claims, checked on 1 November 2026, not a statutory timetable or an unconditional promise for every product. Documentation, category requirements and platform verification still matter.

The useful sequence is product checks, seller structure, import responsibility, then pricing and activation. Our UK product compliance checklist covers the product side. VAT clarity does not replace it.

Before you commit stock, bring the product list, intended prices, stock route and proposed selling account to the same review. Get started with CRSSBRDR to map the UK launch requirements. Fix the trading model before you spend on demand.

What else do foreign sellers ask about UK ecommerce VAT?

How much is UK VAT on ecommerce in 2026?

UK VAT is normally 20%, with 5% and 0% rates for qualifying goods. The product determines the rate. The seller, stock location and channel determine who accounts for it under the applicable rules.

Is VAT 20% of the final selling price?

No. At a 20% rate, VAT inside a VAT-inclusive price is one-sixth of that price. A £60 gross price contains £10 VAT and £50 net revenue before other costs.

Are imports under £135 VAT-free?

No. For qualifying consumer consignments sent into Great Britain, VAT is generally collected at the point of sale. The £135 test concerns the consignment and collection route, not a general VAT exemption.

Does marketplace VAT collection remove import VAT?

No. HMRC distinguishes the import event from the later marketplace sale of UK-held stock. The overseas seller remains responsible for applicable import VAT and Customs Duty under the model described in its guidance.

Is the same VAT treatment used in Northern Ireland?

Not necessarily. Northern Ireland has separate goods rules, including rules for EU movements. This guide's consumer import examples cover Great Britain and should not be copied into a Northern Ireland launch without checking the relevant guidance.

Does a merchant of record change the VAT rate?

No. A merchant of record does not turn a standard-rated product into a zero-rated one. The actual legal seller and supply chain affect responsibilities, while product classification still determines the applicable rate.