January 2021 UK VAT changes and Amazon impact

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9 Dec 2020

Amazon have popped up a notice reminding merchants of the 1st of January 2021 UK VAT changes which will impact how VAT is collected on sales to customers in the UK will change under new legislation being introduced by the UK Government.

Why?

There are two aims from the changes to the changes to VAT treatment of overseas goods sold to customers:

To ensure that goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT free imports.
To improve the effectiveness of VAT collection on imported goods and address the problem of overseas sellers failing to pay the right amount of VAT on sales of goods that are already in the UK at the point of sale.

When will Amazon collect Vat under January 2021 UK VAT changes

Amazon will be responsible for collecting UK VAT on the following sales of goods delivered to customers in the UK where ordered through any Amazon storefront:

Goods delivered from inventory stored outside the UK with a parcel value of up to £135; and
Goods delivered from inventory stored in the UK, irrespective of value, where you, the seller, are not established in the UK.

Where either of these supplies take place, Amazon will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. You will not receive the UK VAT amount in your disbursements and will not be required to remit these amounts to the UK Tax Authorities.

What have Amazon done to prepare?

Don’t forget Amazon have made changes to determine the actual Ship from address information when you confirm shipments that you fulfil. If you are selling to customers in the UK on Amazon, then you will impacted by these changes, regardless of whether you are a UK or overseas seller. If you’re a UK seller shipping from a UK address then completing this field means Amazon won’t collect VAT from the 1st of January 2021 so you should complete your own VAT return as normal.

January 2021 UK VAT changes for goods under £15

Also worth noting, the current VAT exemption for sales of goods under £15, where goods are delivered to UK customers from inventory stored outside of the UK, will also be removed from J1st of January 2021. At that point, UK VAT will be calculated and collected by Amazon on these sales irrespective of their value.