UK VAT on Low-Value Goods: The £135 Threshold Rule Explained
If you sell goods into the United Kingdom from overseas, the £135 VAT rule decides whether you collect tax at checkout or your customer pays it on delivery. Get it wrong and you risk HMRC penalties, surprise charges for buyers, and parcels held at the border. The rule itself is straightforward once you know which side of the £135 line your consignment falls on. This guide explains how the threshold works and what it means for UK VAT registration and e-commerce sellers.
Key Takeaways
- The £135 VAT rule decides who collects VAT, you the seller or the customer at the border, based on consignment value.
- For consignments of £135 or less sold to UK consumers, overseas sellers must charge UK VAT at checkout and register with HMRC.
- Above £135, import VAT and any customs duty are usually collected at the border instead.
- B2B sales and online marketplaces follow different rules, and the relief is under government review.
What the £135 VAT Rule Means in Practice
The threshold applies to the total value of a consignment, not to each item inside it, and it is based on the intrinsic value of the goods. That single distinction, point of sale versus point of import, drives every other obligation in the rule. When you check whether you are over or under the line, the £135 figure covers:
- The intrinsic value of the goods only
- The whole consignment, not individual items
- Transport, insurance, and other taxes are excluded
For consignments of £135 or less sold directly to UK consumers, UK supply VAT is charged at the point of sale rather than as import VAT at the border. The figure roughly aligns with the European Union's €150 low-value threshold.
Below or Above £135: Who Charges the VAT
The clearest way to see your obligations is to compare the two sides of the threshold directly.
| Consignment £135 or less | Consignment above £135 | |
| VAT type | UK supply VAT | Import VAT, plus possible customs duty |
| Who charges it | Overseas seller, at checkout | Collected at the border |
| Seller obligation | Register for UK VAT and remit to HMRC | No VAT charged at point of sale |
| B2C buyer | Pays VAT at checkout | Pays import VAT and duty on delivery, often via the courier |
| B2B buyer (VAT number given) | Buyer accounts for the VAT | Buyer accounts for the VAT or acts as importer |
If you raise a consignment's value above £135 after the sale, you may become liable for import VAT and duty, and have to adjust the VAT already collected. Because the rule is assessed at the point of sale, any later change to consignment value can move the order across the threshold.
When You Must Register for UK VAT
If you are an overseas seller shipping consignments of £135 or less directly to UK consumers, you must register for UK VAT, charge the correct rate at checkout, and remit it to HMRC. Sellers who are already VAT registered do not need to register again. You also need to know the precise nature of your goods, because some items, such as children's clothing, carry a 0% rate rather than the standard 20%.
Marketplaces, Northern Ireland, and What Is Changing
The rules shift again depending on how and where you sell. When goods of £135 or less are sold through an online marketplace, the marketplace, rather than you, is usually responsible for collecting and accounting for the VAT. Northern Ireland follows different treatment because of its position between the UK and EU VAT systems. At the Autumn Budget 2025, the government announced it will remove the customs duty relief on low-value imports by March 2029 at the latest, alongside a consultation on the new arrangements. That consultation closed on 6 March 2026, and since the change is to customs duty rather than VAT, the rules above still apply in the meantime. Treat the duty removal as confirmed but not yet in force, and worth monitoring as the new arrangements are finalised.
Shipping into the UK and unsure how the £135 rule affects your setup? This article is general information, not tax advice, so confirm your position with HMRC or a qualified adviser. Landmark Global supports cross-border brands with in-house customs expertise and compliant delivery into the UK and beyond, and the team can help you map your VAT and clearance requirements before you ship.
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It applies to the total value of the consignment, not to individual items within it. The figure is based on the intrinsic value of the goods, excluding transport, insurance, and taxes. If a consignment's combined value exceeds £135, it falls under the import VAT rules instead.
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Yes. If you are an overseas seller shipping consignments of £135 or less directly to UK consumers, you must register for UK VAT and charge it at checkout, then remit the collected VAT to HMRC. Sellers who are already VAT registered do not need to register a second time.
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For consignments above £135, VAT is generally collected as import VAT at the border rather than at checkout. The courier often pays it to HMRC and recovers it from the recipient, sometimes with an admin fee. In B2B sales, a UK business customer that provides its VAT number accounts for the VAT itself.
