Selling to UK customers from abroad: VAT and the £135 rule
Why overseas sellers charge UK VAT at checkout on orders up to £135, when you need to register, and what changes above that.
General information as of October 2026, not tax advice. Check the current rules with HMRC guidance or an accountant before you register.
Since 1 January 2021, the UK has collected VAT on imported online orders differently from the EU. If you sell from outside the UK to UK consumers and ship the goods yourself, the key number is £135.
The £135 rule
- Orders worth £135 or less (the value of the goods in the consignment): there's no import VAT at the border. Instead, the seller charges UK VAT at checkout and pays it to HMRC.
- Orders over £135: import VAT, and any customs duty, is collected at the border, like a traditional import. Either the customer pays on delivery, or you ship duties-paid and handle it yourself.
The £135 threshold is about the consignment's intrinsic value, excluding shipping and insurance costs that are invoiced separately.
Do you need to register for UK VAT?
If you're an overseas business selling goods worth £135 or less directly to UK consumers, yes, from your first sale. The UK's VAT registration threshold applies to UK-established businesses; overseas sellers making these sales don't get a threshold.
Once registered you:
- Charge UK VAT at the right rate. The standard rate is 20%; some goods, such as children's clothing and many books, have reduced or zero rates.
- Show VAT-inclusive prices to UK consumers. It's the legal norm for consumer prices in the UK.
- File UK VAT returns, usually quarterly, and pay what you collected.
If you sell through an online marketplace, the marketplace generally collects the VAT instead. On your own Shopify store, it's you.
Orders over £135
Above £135, the VAT is charged at import. Two ways to handle it:
- Delivered duty unpaid (DDU): the customer pays import VAT, any duty and the carrier's handling fee on delivery. Cheaper for you, but a surprise for them, and some will refuse the parcel.
- Delivered duty paid (DDP): you pay the import charges, usually through your carrier, and price them into the order. Better experience, more admin.
If many of your orders are above £135, DDP is usually worth it.
Northern Ireland is different
Northern Ireland follows EU VAT rules for goods. Orders to Northern Ireland from outside the UK and EU fall under the EU's system, including the €150 IOSS scheme (see our EU guide), rather than the £135 rule.
Setting it up on Shopify
- Register for UK VAT with HMRC and note your VAT number.
- In your Shopify tax settings, add your UK VAT registration so Shopify charges UK VAT at checkout.
- Set up a United Kingdom market with GBP pricing, and choose tax-inclusive pricing so UK shoppers see the price they'll pay.
- Make sure your shipping labels and customs declarations show your UK VAT number for orders under £135, so customs knows VAT was paid.
Check Shopify's current help pages for the exact menus.
Other things UK customers expect
- Clear delivery times, including customs if you ship from abroad.
- The right to cancel: UK consumers generally have 14 days to cancel an online order after receiving it.
- Product safety: electrical goods, toys and cosmetics need to meet UK rules (UKCA or, for many products, CE marking).
Get the VAT right and the UK is one of the easiest English-speaking markets to sell into.