Changes to UK’s VAT rules for overseas goods from Jan 1, 2021

Royal Mail has informed that all overseas goods sold to customers in the United Kingdom will be subjected to VAT liability starting from January 1, 2021, the Department of Posts said.

The UK has left the EU, and the transition period after Brexit comes to an end this year. At the end of the transition period, the UK government will introduce a new model for the VAT treatment of goods arriving into Great Britain from outside of the UK.

From 11 pm on 31 December 2020, consignments of goods with a value of GBP135 or less that are outside: the UK and sold directly to customers (not through an online marketplace) in Great Britain (England, Scotland and Wales) will have UK supply VAT charged at the point of sale. 

The GBP135 limit applies to the value of a total consignment that is imported, not the separate value of individual items that are in a consignment.

The new arrangements mean that import VAT will no longer be collected on consignments not exceeding GBP135, except for the following types of consignment, which are outside the scope of the new arrangements: non-commercial consignments, such as gifts, consignments containing any goods that are subject to an excise duty, consignments from Jersey and Guernsey that are covered by the Import VAT Accounting Scheme.

However, gift relief for consignments valued up to GBP39 will remain.

For further information, the Department of Posts requests to refer to the below link.

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

Post Master General Ranjith Ariyaratne said Sri Lanka Post will not be responsible for action taken by Royal Mail or British Customs for those who do not comply with the latest VAT regulations.