There will be several VAT changes for businesses that import or export goods from 1 January 2021 as the rules that permit free movement of goods and people between the UK and the EU cease to apply from 11pm on 31 December 2020.

If your business purchases low value goods from abroad which cost less than £135 per parcel you need to factor in the cost of UK VAT from 2021. Currently many low value goods enter the UK with no VAT or duty paid as they are not declared by overseas sellers.

From 1 January 2021 all goods entering Great Britain must be subject to VAT (different rules will apply for Northern Ireland). You should talk to your suppliers and find out which of these routes they will take:

• sell without VAT added, as a business to business transaction - you will need to provide your VAT number but must account for the VAT due as a reverse charge in your own VAT records;
• register for VAT in the UK and charge UK VAT on all UK sales from 2021; or
• sell through an online marketplace which is registered for VAT in the UK and will charge you VAT on the sale and issue a sales invoice.

Last updated: April 29th 2021.