If your business imports goods from outside the UK, you should be aware that from 1 January 2021, the UK Government is making changes to import VAT rules. This will coincide with the end of the Brexit transition period.
The new rules largely apply to consignments of goods arriving into Great Britain (England, Wales & Scotland) from outside the UK, with a value not exceeding £135.
This includes goods coming from both EU and non-EU countries. As far as Great Britain is concerned, there will be no distinction between the two at the end of the transition period.
Northern Ireland will, however, have a special status with regards to VAT, in order for it to continue frictionless trade with Ireland. For goods, it will remain part of the EU, so an alternative system will apply. The details are still being finalised by the UK Government at the time of writing.
Imports of a value below £135
For these goods, the following changes will apply from 1 January 2021:
To note there are different rules for excise goods and non-commercial transactions between private individuals.
Imports of a value above £135
For imports of goods by UK VAT registered businesses above £135, from 1 January 2021:
There will be exclusions to this rule. Businesses will need to seek advice to determine if any apply to the specific goods they are importing.
Businesses established outside the UK, but that own goods in the UK that they sell to UK customers, are already liable for UK VAT and should already be VAT registered in the UK.
However, online marketplaces should note that in 2021 that they will be deemed to make the supply of the goods to the customer. This could mean the overseas suppliers may no longer be liable to be registered for UK VAT.
As we approach the end of the transition period, you should be mapping out your business supply chains and considering EU VAT registrations.
In addition, you may also need to look into the following:
This is not an exhaustive list. It’s strongly recommended that you seek professional advice to ensure you are prepared for the changes.
At Lubbock Fine, we have spent the last four years supporting businesses to navigate the VAT implications of Brexit. You can read our recent VAT and Brexit guide here.
If your business is impacted by these changes or you have any questions, please contact your usual Lubbock Fine adviser, or our VAT Director, Jas Dhillon (firstname.lastname@example.org).