How US E‑commerce Sellers Should Handle The £135 Consignment Threshold

£135 Consignment Threshold is the UK value threshold used in special VAT rules for certain consignments of goods sold to customers when the goods are outside the UK at the point of sale. For US‑based merchants selling to UK consumers, the threshold affects whether you must collect UK VAT at checkout or whether VAT is charged on import.

US sellers commonly face two practical options: (1) collect and remit UK VAT at point of sale for consignments at or below the threshold, or (2) allow VAT and customs duty to be charged at import for consignments above the threshold. Choosing correctly reduces delays, avoids unexpected charges for customers, and limits compliance risk.

Steps For US Sellers To Comply

• Assess Order Value Logic: Configure e‑commerce systems to compute the total consignment value in GBP and include any components treated as part of the supply (for example, certain delivery costs).
• Decide Who Collects VAT: If you sell through a marketplace, check whether the platform is the deemed supplier. If selling direct, determine whether to register for UK VAT or use a fiscal representative where required.
• Update Checkout Experience: Display VAT‑inclusive pricing for UK customers where you collect VAT, to reduce cart abandonment caused by late‑added fees.
• Recordkeeping: Keep invoices, export documentation and evidence of where the goods were at time of sale to support the VAT treatment applied.

Fulfilment And Logistics Considerations

For warehouses and 3PL providers handling UK‑bound consignments, being clear about whether VAT was collected at the point of sale matters for customs clearance. If VAT has already been collected and remitted, import clearance is faster and carriers typically do not charge the recipient VAT on delivery. If VAT is due at import, plan for carriers to present those charges to the recipient on delivery and ensure paperwork and EPC/HS codes are accurate to avoid delays.

Pricing Example For US Sellers

Example: A US store sells a single clothing item listed at USD 140 (approx. £110). Because the consignment is under the threshold, the seller should charge UK VAT on the sale at the applicable rate (typically the standard rate for most goods). If instead the order was for goods totaling USD 400 (approx. £315), the item would exceed the threshold and VAT would be collected at import.

Marketplace Sales Versus Direct Sales

Marketplaces frequently act as the deemed supplier and collect VAT on qualifying sales, simplifying compliance for many small US sellers. However, don’t assume this will always be the case — review marketplace policies and confirm who issues VAT invoices, who files VAT returns and whether the marketplace reports sales to HMRC.

Practical Tips To Reduce Risk

• Test Checkout Scenarios: Simulate UK orders with different totals to ensure VAT logic behaves correctly across currencies and discounts.
• Communicate Delivery Charges: Make clear whether customers will pay any import charges on delivery; ideally include VAT in checkout to avoid surprise fees on arrival.
• Work With Customs Experts: For higher‑value sales or frequent UK shipments, partner with customs brokers or use a 3PL that understands UK import VAT processes.
• Keep Records: Maintain evidence of VAT charged or import VAT paid so you can respond to HMRC enquiries or customer disputes.

In short, the £135 Consignment Threshold determines whether a US e‑commerce seller must collect UK VAT at sale or whether VAT will be paid at import. Configuring checkout, understanding marketplace roles, and coordinating with logistics partners will reduce compliance friction and improve the customer delivery experience.