An International delivery company is warning that British citizens buying lower value items from overseas after Brexit could see a 20% rise in price due to VAT.
In addition, overseas sellers will also have to register for UK VAT, Parcelhero said, dubbing it a potential ‘double-whammy’ for international trade.
The company says that an HMRC policy paper released in July has confirmed that Low Value Consignment Relief will end on all imports into the UK once Britain leaves the EU on January 1, 2021.
ParcelHero’s head of consumer research, David Jinks, says the paper confirms VAT exemption ends on all eligible imported goods valued at £15 or less next year. Previously, such items had escaped the tax.
The change is happening at the exact time many overseas sellers are being forced to register for VAT in the UK, warns David. He says that will drastically reduce the number of low-value online retailers wanting to sell to the British market.
“VAT is currently waived on any item under £15 (or 22 Euro) entering the UK from outside the EU. This saves red tape and annoying extra charges on low-value items'” explained David.
“After Brexit, the changes mean that there will be VAT to pay on all applicable EU and overseas sales to the UK, charged at the UK VAT rate (currently 20%).
“What does that mean for UK online shoppers? Put bluntly, it means that an item that now costs £14.99 will cost £17.98 from 1 January because of the extra 20% VAT. We’ll all be paying up to around £3 more on every international purchase.”
The paper also says that international sellers will be responsible for charging and collecting the UK VAT on all items under £135. That means overseas sellers will be required to register and account for the VAT to HMRC unless they use an online marketplace.
If they do sell through a marketplace, for example Amazon or eBay, the marketplace will be responsible for collecting and accounting for the VAT, said David.