The £135 VAT rule for UK dropshippers

Last checked 29 September 2026

Since 1 January 2021, VAT on goods shipped into the UK from abroad in consignments worth £135 or less is charged at the point of sale, not at the border. Who charges it depends on where you sell.

Selling on a marketplace such as eBay

For goods outside the UK in consignments of £135 or less, HMRC’s guidance is that “where those goods are sold through an online marketplace, the online marketplace will be liable for the VAT.” In other words, on these orders eBay charges the buyer UK VAT and pays it to HMRC, whether you are based in the UK or overseas. Business-to-business sales where the buyer gives a UK VAT number are handled differently.

Selling from your own store

On your own website — a WooCommerce store, for example — there is no marketplace in between. For consignments of £135 or less sent from outside the UK, HMRC says “the seller must charge and account for VAT at the point of sale.” Depending on where your business is established, that can mean registering for UK VAT — an overseas seller has no registration threshold to stay under. Talk to an accountant before you start selling imported goods from your own shop.

Import VAT and customs duty

Because VAT is collected at the point of sale, import VAT is not charged at the border on these consignments, and at present customs duty is not charged on them either (excise goods such as alcohol and tobacco are the exception). Splitting an order to keep consignments under £135 is not allowed.

That duty relief is ending. The government announced in the November 2025 Budget that it will remove the customs duty relief on low-value imports, and in 2026 brought the date forward to October 2028. After that, goods of £135 or less will be liable for import duty.

Where Zixo fits

Zixo calculates VAT per sale and per marketplace using your registered rate and tracks your position against the UK VAT registration threshold, so the numbers are in front of you. It is a running view, not a filing tool, and not tax advice. See profit and VAT tracking.

Sources: GOV.UK — “VAT and overseas goods sold directly to customers in the UK” and “VAT and overseas goods sold to customers in the UK using online marketplaces” (both last updated 13 May 2022); HM Treasury announcements on low-value imports (November 2025, June 2026). Checked 2026-09-29. This is general information, not tax advice.