What Is Low-Value Consignment VAT? Understanding the £135 Rule

Low-Value Consignment VAT UK VAT treatment applying to specified consignments valued at £135 or less, including point-of-sale VAT rules in certain direct and marketplace transactions.

The rule changed how VAT is collected on small-value goods imported into the United Kingdom. Prior to the change, many low-value imports benefited from a relief that exempted them from VAT at import; since the reform, VAT generally applies to these consignments and, in many cases, is collected at the point of sale rather than at the border. That shift affects overseas sellers, marketplaces, and UK-based buyers because VAT must be charged and remitted on eligible sales where previously no VAT was collected on import.

Which Consignments Qualify

Not every parcel is treated the same. The policy applies to physical goods imported into the UK where the value of the consignment (including postage, packing and any insurance charged to the buyer) does not exceed £135. Services, digital supplies, and most excise goods are outside this rule. Sellers and marketplaces must check the total paid by the buyer to establish whether the consignment meets the low-value threshold.

Why The Point-Of-Sale Approach Matters

Collecting VAT at the point of sale simplifies border processes for customs and helps the government capture VAT revenue that previously went uncollected on small consignments. For merchants and marketplaces it means VAT is visible to the buyer at checkout — changing pricing, customer expectations, and accounting. For logistics, it reduces the volume of VAT collections and refunds processed at import and shifts compliance to commercial suppliers and platforms.

How The VAT Is Calculated

Calculation uses the total amount charged to the buyer for the goods, including shipping, insurance and other compulsory charges, provided the combined value is at or below £135.

• Value Basis: Use the price paid by the buyer in the marketplace or storefront, including any delivery charges that are compulsory at purchase.
• VAT Rate: Apply the UK VAT rate(s) that are appropriate for the product type (standard, reduced, or zero where applicable).
• Currency Conversion: Convert foreign currency to GBP using the seller’s accounting policy or marketplace method; maintain records of the conversion method used.

Who Is Responsible For Charging And Remitting VAT

Responsibility depends on the sales channel and contractual relationships. There are three common models:

• Direct Overseas Seller: The seller charges UK VAT at checkout and registers for UK VAT if required.
• Marketplace Deemed Supplier: If a sale occurs through an online marketplace, the marketplace may be treated as the supplier and is responsible for collecting and remitting VAT for low-value consignments.
• Fulfilment/Third-Party Logistics: Logistics providers do not usually collect VAT unless they act as a seller or marketplace; their role is delivering consignments and providing customs declarations where required.

Practical Example

A US merchant sells a printed T-shirt to a UK consumer for £25 with £10 postage. Because the total is £35 (below £135) UK VAT must be applied at the point of sale. If the transaction is processed through a marketplace that is the deemed supplier, the marketplace will calculate the VAT, show it to the consumer at checkout, and remit it to HMRC. If the merchant sells directly via its own website, the merchant must charge VAT at checkout and account to HMRC.

Common Operational Impacts

• Pricing Adjustments: Account for VAT in advertised prices or show it clearly at checkout to avoid surprise fees for buyers.
• VAT Registration: Overseas sellers may need to register for UK VAT if they are the supplier responsible for the sale.
• Invoicing and Records: Maintain VAT-compliant invoices and records of sales, conversions, and remittances for HMRC inspection.

In short, the Low-Value Consignment VAT rule requires VAT to be collected on most consignments valued at £135 or less, frequently at the point of sale. Sellers, marketplaces and fulfilment partners must confirm who is the supplier for VAT purposes, ensure VAT is shown to buyers where required, and keep compliant records.