Christmas Shopping - The VAT Rules That Apply When Shopping Online


With last minute Christmas Shopping upon us, Mitchell Charlesworth's VAT Expert, Gemma Gower, outlines the VAT rules that could apply when buying goods online.

Christmas Present

We all know that internet shopping can save both time and money - with the added bonus of shopping in the comfort of your own home with a cuppa and a mince pie to hand! With the festive season now upon us, more of us than ever before are going online to bag a yuletide bargain for our loved ones.  However, shoppers are warned to beware of the potential hidden costs of online shopping.

Customers who have unwittingly purchased items from outside of the EU (i.e, from a .com website) which, at first glance, seem to be a bargain, have been hit with additional charges upon import into the UK.

Unlike purchasing goods from within the EU, where additional charges such as UK VAT and Customs Duty must be fully disclosed to the buyer, goods bought from outside of the EU, for delivery within the UK, may be subject to Customs Duty, Excise Duty and/or Import VAT.

Unless these charges have been pre-paid by the sender, they can prove to be a nasty surprise for the recipient in the UK, as all charges must be cleared before the goods can be delivered.  Second-hand or used goods, such as those purchased from auction sites are also subject to the rules.

Broadly speaking:

  • Goods purchased over the internet, or by mail order from outside of the EU, will be subject to UK VAT where the value of the package exceeds £15 (NB  specifically excluded from this relief are goods from the Channel Islands - all purchases from the Channel Islands are subject to UK VAT);
  • Where goods exceed £135, Customs Duty may also be due.  The rate of Duty will depend on the nature of the goods and where they were sent from.  Normally, duty is waived where Customs Duty due is less than £9;
  • Import VAT may also be levied on gifts sent to a UK recipient from outside of the EU, where the value of the gift exceeds £40.  Where the value of the gift exceeds £135, Customs Duty may also become due;
  • Ordering and paying for goods over the internet, to be sent to someone other than you, does not qualify as giving a gift.  In order to qualify as a gift, it must be sent from a private person outside the UK to a private person within the UK, the Customs Declaration must be completed correctly, it must be for personal use, and occasional in nature (birthdays, weddings, Christmas, etc);
  • Excise duty is always due on all purchases of alcohol and tobacco products purchased online or by mail order.

Thankfully, it's not all Bah-humbug on the indirect tax front! There are still opportunities to make genuine savings!

Planning a Christmas shopping trip across the pond?  You can bring goods for personal use (including souvenirs and perfume) - from outside of the EU - up to the value of £390 without paying tax or duty (unless you are travelling by private plane or private boat, in which case the limit is £270 tax and duty free).

Also, there is no limit on the amount of VAT and duty paid alcohol and tobacco brought in from another EU country, for your own use.  However, HMRC officials may question whether large quantities of these goods are genuinely for personal use.

If you have a specific VAT question, please do not hesitate our VAT expert Gemma Gower on tel: 0151 255 2300 or email Gemma.Gower@mitchellcharlesworth.co.uk

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