United Kingdom
This guide is for e-commerce companies that sell online via web stores or at marketplaces.
Provinces
Goods
Provinces
Goods
Digital services
About
Goods
About
Goods
About
Digital services
About
Digital services
Goods
Digital services
Goods
Digital services
VAT Standard rate
The standard VAT rate in the United Kingdom in 2024 is 20%.VAT Reduced rate
5%
Some goods and services, for example, children’s car seats, mobility aids for the elderly and smoking cessation products – nicotine patches and gum.0%
- Equipment for disabled people;
- Sanitary protection products;
- Low vision aids.
VAT standard rate
The standard VAT rate in the United Kingdom in 2024 is 20%.VAT reduced rate
5% and 0%.
VAT Standard rate
20%
VAT Reduced rate
5%, 0%
Thresholds
£70.000, £85.000
Thresholds
As the UK left the EU distant sales threshold no longer applies to distant sales to the UK. The exemption is sales between Northern Ireland and the EU. The distant sales threshold is £70,000 for goods sold from The EU to Northern Ireland customers. As the UK left the EU distant sales threshold no longer applies to distant sales to the UK. The exemption that exists for goods between Northern Ireland and the EU doesn’t include sales of services. That means that for non-UK businesses VAT registration obligation starts from the first B2C sale. For UK-based businesses, there is a local sales threshold of £85,000. That threshold is only applicable to UK-established businesses selling to UK customers.Deductible VAT
If goods or services were used to make taxable supplies in the UK, VAT in input invoices might be credited. For example:- VAT paid at custom clearance with your EORI number;
- VAT paid to the UK suppliers.
Registration procedure
To register, you need to create a personal account on the website of the tax department and send an online application. Usually, the application is considered within 30 days. After that, Tax Team may send you an additional request for documents or information.VAT payment date
The deadline for VAT payment coincides with the deadline for submitting the VAT declaration.Filing VAT returns
You must submit your return online to HMRC unless:- Your business is subject to an insolvency procedure – if you have a Company Voluntary Arrangement or an Individual Voluntary Arrangement you can submit your return online if you want to;
- You object to using computers on religious grounds;
- You can not because of your age, a disability or because of where you live, for example, you do not have internet access.
Penalties
HMRC can charge you a penalty of up to:- 100% of any tax under-stated or over-claimed if you send a return that contains a careless or deliberate inaccuracy;
- 30% of an assessment if HMRC sends you one that’s too low and you do not tell them it’s wrong within 30 days;
- £400 if you submit a paper VAT return unless HMRC has told you you’re exempt from submitting your return using your VAT online account or Making Tax Digital compatible software.
E-Invoicing in UK
The UK government currently requires e-invoicing only for public sector procurement with the National Health Service (NHS) being mandatory since 2014 and all central government departments and most local authorities since April 2020. While there’s no current mandate for B2B transactions, the government hasn’t ruled out making it mandatory in the future. Here’s why: The UK government is not opposed to making e-invoicing mandatory for B2B transactions, but they haven’t announced a specific timeline yet.Threshold
As the UK left the EU distant sales threshold no longer applies to distant sales to the UK. The exemption that exists for goods between Northern Ireland and the EU doesn’t include sales of services. That means that for non-UK businesses VAT registration obligation starts from the first B2C sale.Pieces of evidence
Examples of the type of supporting evidence that tax authorities will accept include:- The billing address of the buyer;
- The IP address of the device used by the consumer;
- buyer’s bank details;
- The country code of the SIM card used by the buyer;
- The location of the consumer’s fixed landline through which the service is supplied;
- Other commercially relevant information – for example, product coding information that electronically links the sale to a particular jurisdiction.
Defining digital services (E-services list)
Radio and television broadcasting services, which include:- Provision of audio and audiovisual content for simultaneous listening or viewing by the general public based on the schedule of programs by the person in charge of editorial;
- Live streaming through the internet if broadcast аt the same time as transmission by radio or television.
- Fixed and mobile telephone services for the transmission and switching of voice, data, and video, including telephone services with an imaging component, otherwise known as videophone services;
- Telephone services are given through the internet, including Voice over Internet Protocol (VoIP);
- Voice mail, call waiting, call forwarding, caller identification, 3-way calling and other call management services;
- Paging services;
- Access to the internet.
- Supplies of images or text, such as photos, screensavers, e-books, and other digitized documents, for example, PDF files;
- Supplies of music, films, and games, including games of chance and gambling games, and programs on demand;
- Online magazines;
- Website supply or web hosting services;
- Distance maintenance of programs and equipment;
- Supplies of software and software updates;
- Advertising space on a website.
Registration procedure
If your supplies are liable to UK VAT you will need to register for UK VAT if you are based outside the UK. To register, you need to create a personal account on the website of the tax department and send an online application. Usually, the application is considered within 30 days. After that, Tax Team may send you an additional request for documents or information.VAT returns filing date
The standard VAT tax period is a quarter. You can check your VAT Return and payment deadlines in your VAT online account. It is necessary to submit declarations no later than 7 days in the second month following the reporting period.Keeping records
You must keep VAT records for at least 6 years. You can keep VAT records on paper, electronically, or as part of a software program (such as book-keeping software). Records must be accurate, complete, and readable. Records you must keep include:- Copies of all invoices you issue;
- All invoices you receive (originals or electronic copies);
- Self-billing agreements – this is where the customer prepares the invoice;
- Name, address, and VAT number of any self-billing suppliers;
- Debitor credit notes;
- Import and export records;
- Records of items you cannot reclaim VAT on – for example, business entertainment;
- Records of any goods you give away or take from stock for your private use;
- Records of all the zero-rated, reduced or VAT-exempt items you buy or sell;
- A VAT account;
- You must also keep general business records such as bank statements, cash books, cheque stubs, paying-in slips, and till rolls;
- If you use the Cash Accounting Scheme you must use these records to match them against your payment records and receipts.
Penalties
Penalties for late filing of the declaration from 2 to 15 percent. The amount of the fine depends on the number of months of delay and the annual turnover.E-Invoicing in UK
The UK government currently requires e-invoicing only for public sector procurement with the National Health Service (NHS) being mandatory since 2014 and all central government departments and most local authorities since April 2020. While there’s no current mandate for B2B transactions, the government hasn’t ruled out making it mandatory in the future. Here’s why: The UK government is not opposed to making e-invoicing mandatory for B2B transactions, but they haven’t announced a specific timeline yet.
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