What the £135 Consignment Threshold Means For VAT On Low‑Value Imports

£135 Consignment Threshold refers to 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. These rules determine whether VAT is collected at the point of sale by the seller or marketplace, or whether VAT (and potentially customs duty) is charged when the goods enter the UK.

At its simplest, the threshold sets a dividing line between two common VAT treatments for goods sold from overseas to UK consumers. When a single consignment’s total value is at or below the threshold, UK VAT is normally required to be collected at the point of sale by the supplier or the online marketplace facilitating the sale. For consignments whose value exceeds the threshold, VAT and any applicable customs duties are usually collected when the goods are imported into the UK and processed through customs.

How The Threshold Operates In Practice

The rule looks at the value of the consignment — the total price paid by the customer for the goods (including extras such as delivery charges that are part of the taxable supply). If that total is equal to or under the threshold, the seller or the marketplace must account for UK VAT on the sale. If the consignment is above the threshold, import VAT and customs duty normally apply on arrival and are handled through import procedures.

Why It Matters To Merchants And Marketplaces

For e‑commerce sellers and online marketplaces the threshold changes where VAT liability is recognised and who is responsible for collecting and remitting it. The difference affects pricing, customer experience at checkout, accounting processes, and import logistics. Collecting VAT at sale simplifies the customs clearance at the border (if VAT has already been paid), while leaving VAT until import shifts administrative burden to carriers, customs agents or the recipient.

What The Rule Typically Covers

• Point of Sale VAT Collection: For consignments up to the threshold, the supplier or marketplace collects VAT at the time of sale and accounts for it to HMRC.
• Import VAT at Border: For consignments above the threshold, VAT and possible customs duty are due on import and are usually collected by the carrier or customs agents.
• Value Calculation: The taxable value commonly includes the price of the goods plus any associated charges that form part of the supply.

Who Typically Pays Or Accounts For VAT

Responsibility depends on the commercial model. Overseas sellers making direct sales to UK consumers must either register for UK VAT or rely on the marketplace rules that place responsibility on the marketplace to collect VAT for qualifying supplies made through it. Marketplaces often become the default collector where they facilitate sales, which shifts compliance obligations from many small sellers onto the platform.

Practical Example

Example: A US merchant sells a single package of homeware to a UK consumer for £100 including shipping. Because the consignment value is at or below the threshold, the merchant — or the marketplace if the sale is made through one — should collect UK VAT at the point of sale and remit that VAT to HMRC. If instead the customer orders goods costing £200, VAT and customs duty would normally be paid as part of import clearance when the goods arrive in the UK.

How It Impacts Pricing And Checkout

• Transparent Pricing: Charging VAT at the checkout avoids surprise taxes or handling fees on delivery and improves conversion by showing a delivered price.
• Split Costs: If VAT is collected at the border, carriers often add customs and handling fees which customers see on delivery rather than at checkout.

Operational Tips For Warehouses, 3PLs And Sellers

• Classify Consignments: Ensure order management systems compute total consignment value (including relevant charges) so VAT treatment is applied consistently.
• Marketplaces: If you sell through an online marketplace, confirm whether the platform is the deemed supplier for VAT on low‑value consignments — this affects who registers and reports.
• Pricing Strategy: Decide whether to include VAT in displayed prices for UK customers and test how that affects competitiveness.
• Documentation: Keep sales records that show VAT collected at sale and evidence of where goods were at the time of sale (to support the correct treatment under the rule).

In short, the £135 Consignment Threshold sets a practical dividing line for VAT treatment of overseas sales to UK consumers: at-or-below the threshold, VAT is normally collected at sale; above it, VAT is usually collected at import. For sellers, marketplaces, carriers and warehouses the threshold affects pricing, compliance, and the customer experience at delivery.