VAT in the UK 2026 – Complete Guide for E-Commerce Sellers

Since the end of the Brexit transition period on 31 December 2020, the United Kingdom has operated under its own independent VAT system, entirely separate from EU rules. For e-commerce entrepreneurs selling into or from the UK, understanding the current VAT framework is essential for compliance and avoiding penalties.

VAT Rates in the UK

There are three main VAT rates in the UK in 2026, all unchanged from previous years:

Standard Rate (20%) — applies to most goods and services not covered by reduced or zero rates.

Reduced Rate (5%) — applies to specific products and services including domestic energy (gas and electricity), certain healthcare products, children’s car seats, and residential property conversions.

Zero Rate (0%) — applies to most food products, books, newspapers, children’s clothing, and prescription medicines. Although no VAT is charged on zero-rated sales, they must still be reported on VAT return forms and count toward the registration threshold.

Some supplies are VAT-exempt (such as healthcare, education, and financial services) — these are different from zero-rated supplies and do not need to be reported as VAT-able transactions.

VAT Registration in the UK

For UK-established businesses

The VAT registration threshold for UK-established businesses is £90,000 of taxable turnover in any rolling 12-month period — unchanged since 1 April 2024. The deregistration threshold is £88,000. Once the threshold is crossed, businesses must notify His Majesty’s Revenue & Customs (HMRC) within 30 days, and VAT must be charged from the effective date of registration.

For non-UK businesses

Non-UK sellers have no registration threshold — registration is required from the first taxable transaction in the UK. This applies regardless of turnover and includes any business storing goods in the UK or importing goods into the UK for sale.

Registration is completed electronically through the HMRC portal (Government Gateway). Following registration, businesses typically receive their VAT certificate and number within 30 working days.

Transactions Requiring VAT Registration in the UK

The following activities typically require UK VAT registration:

• Importing goods into the UK
• Exporting goods from the UK
• Storing goods in the UK and selling them (including Amazon FBA and fulfilment centres)
• Purchasing and selling goods within the UK (local trade)
• Selling B2C goods to UK consumers valued at or below £135 (the seller must charge UK VAT at the point of sale)
• Selling goods through online marketplaces such as Amazon using the fulfilment model

For B2C shipments valued above £135, the transaction is treated as a standard import into the UK and UK import VAT is applied at the border — a UK VAT number is not required for the seller in this case, though customs procedures must be followed.

VAT Payment and Accounting Schemes

After registering for VAT in the UK, businesses can choose from several accounting schemes depending on their turnover and needs:

Standard Accounting Scheme — VAT is accounted for based on the date invoices are issued, regardless of when payment is received. Quarterly VAT returns are submitted and refunds claimed quarterly. Mandatory for businesses with annual turnover exceeding £1,350,000.

Cash Accounting Scheme — VAT is accounted for when payment is actually received (for sales) or made (for purchases). Available for businesses with annual taxable turnover not exceeding £1,350,000. Useful for businesses that often have to wait for payment.

Annual Accounting Scheme — businesses make advance VAT payments during the year and submit a single annual VAT return. Available for businesses with annual turnover not exceeding £1,350,000.

VAT Flat Rate Scheme — businesses pay a fixed percentage of gross (VAT-inclusive) turnover to HMRC and keep the difference between this and the VAT charged to customers. Available for businesses with expected net annual turnover not exceeding £150,000. The applicable flat rate percentage depends on the business sector. Note: “limited cost traders” must use a higher flat rate of 16.5%.

Filing VAT Returns – Deadlines and Making Tax Digital

UK VAT returns are generally submitted quarterly. The deadline is one month and seven days after the end of each accounting period (e.g. for the quarter ending 31 March, the deadline is 7 May).

From 1 April 2026, all VAT-registered businesses must keep digital records using HMRC-compatible software and submit VAT returns via Making Tax Digital (MTD)-compatible software. This applies to all VAT-registered businesses regardless of turnover — there are no longer any exemptions based on size.

Zero returns must still be filed even when there are no transactions in a period.

Penalties for Late Registration and Non-Compliance

For late VAT registration, HMRC charges a penalty as a percentage of the net VAT owed from the date registration was due:

• Up to 9 months late: 5%
• 9 to 18 months late: 10%
• More than 18 months late: 15%

A minimum penalty of £50 applies.

For late filing of returns, a points-based penalty system applies — four points in a 12-month period triggers a £200 fine, with further £200 penalties for each subsequent late return. For late payment, penalties of 2% apply after 15 days, rising to 4% after 30 days, with daily penalties accruing thereafter.

Selling Through Amazon in the UK

When sending goods to Amazon fulfilment warehouses in the UK and selling through Amazon FBA, UK VAT registration is required in order to import goods under a British VAT number.

For B2C shipments valued below £135, import VAT is no longer collected at the border — it must instead be charged by the seller at the point of sale. Amazon typically collects and remits VAT on behalf of sellers for B2C sales through the marketplace under the deemed supplier rules.

For B2B sales to UK VAT-registered businesses, the reverse charge mechanism may apply — the buyer accounts for the VAT rather than the seller.

Intrastat in the UK

Following Brexit, trade between Great Britain (England, Scotland, and Wales) and the EU no longer requires Intrastat reporting. The exception is Northern Ireland, which continues to follow EU rules for goods trade under the Windsor Framework. Exports and imports with Northern Ireland must be reported as part of Intrastat using the country code XI.

UK VAT Invoices

UK VAT invoices must include the following information:

• Seller’s details: name, address, VAT number
• Buyer’s details: name, address, VAT number (for B2B)
• Unique invoice number
• Date of issue and date of supply (if different)
• Description of goods or services, quantity/weight
• Net amount, VAT amount, gross amount
• Applied VAT rate
• Annotation for 0% VAT supplies explaining the exemption basis
• Annotation for reverse charge supplies explaining the legal basis
• Currency in which the invoice was issued

Summary

UK VAT for e-commerce sellers in 2026 is shaped by the post-Brexit independent system, the £90,000 registration threshold for UK-established businesses (zero for non-residents), the £135 B2C import threshold, and the now fully mandatory Making Tax Digital framework. Sellers using Amazon FBA or other UK-based fulfilment must register from day one, and all VAT-registered businesses must file digitally using MTD-compatible software.

For questions about UK VAT registration or ongoing compliance, our team of experts is ready to help: Contact us — amavat®