How VAT and Duties Work When Importing Goods to Sell Online

Importing goods to sell online in the UK involves understanding VAT, customs duties, de minimis values, postponed accounting, duty reliefs and the need for an EORI number. Getting these wrong can lead to unexpected costs, delays at the border or compliance problems with HMRC.

This guide explains the key concepts in practical terms, outlines the steps you need to take, and highlights areas where rules change frequently so you can check the latest requirements on GOV.UK before importing.

Why VAT and Import Duties Matter for Online Sellers

When you bring goods into the UK from outside the country you usually face two separate charges: customs duty based on the type of product and its value, and VAT charged on the total value including duty, shipping and insurance. These apply whether you import small test orders or container loads for your e-commerce store.

As an early-stage founder you must decide who accounts for these taxes: you, your supplier or the courier. Choosing the wrong Incoterms or failing to register correctly can mean paying charges twice or facing goods held at the border. Always verify current rates and thresholds on GOV.UK because they change.

Registering for an EORI Number

An Economic Operators Registration and Identification (EORI) number is required for most imports and exports. For UK-based businesses this usually starts with GB followed by your VAT number or Companies House number.

Practical steps to register:

Go to the GOV.UK EORI application page.
Provide your business details and confirm you import or intend to import goods.
Wait for the instant or next-day confirmation email containing your EORI number.
Use this number on all commercial invoices, customs declarations and courier paperwork.

Register before placing your first order. Sole traders and limited companies both need one. Check the current GOV.UK guidance because the exact process can be updated.

Understanding De Minimis Values

De minimis refers to the low-value threshold below which certain import taxes may not apply. For VAT and duty, different limits exist depending on the goods value, shipping method and whether the consignment is commercial or a gift.

When importing to sell online, most parcels fall into the commercial category. Even if a shipment is below the current de minimis level for duty, VAT may still be due. Couriers often collect VAT at the point of delivery and pass it on to you. Always confirm the latest de minimis rules on GOV.UK rather than relying on outdated information from suppliers or forums.

Track the total value including carriage costs. Small repeated orders that individually sit under the threshold can still trigger HMRC scrutiny if they appear to be deliberate fragmentation of a larger commercial shipment.

Postponed VAT Accounting

Postponed VAT Accounting (PVA) lets eligible UK VAT-registered businesses defer the payment of import VAT until their next VAT return instead of paying it upfront to the courier or at the border. This improves cash flow, especially useful for early-stage e-commerce sellers who may have tight margins.

How to use PVA in practice:

Ensure your business is registered for VAT with HMRC.
Apply for PVA via your HMRC online account or the relevant form.
Once approved, instruct your courier or freight forwarder to use postponed accounting on the customs declaration.
Record the import VAT in your VAT return as both input and output tax in the same period, so the net effect is usually zero if fully recoverable.

Not all businesses or goods qualify. Check current eligibility rules and any restrictions on GOV.UK before relying on PVA for your imports.

Duty Reliefs and How to Claim Them

Duty reliefs reduce or remove customs duty in specific situations. Common examples include relief for goods you intend to process or repair in the UK before re-export, samples, or certain charity and educational imports. For online sellers the most relevant are often Inward Processing Relief or temporary admission relief when testing products.

Steps to explore reliefs:

Identify the commodity code for your products using the Trade Tariff tool on GOV.UK.
Check if any relief or suspension applies to that code.
Apply in advance using the correct HMRC form or through your customs agent.
Keep detailed records of how the goods are used to satisfy any end-use conditions.

Reliefs often require authorisation before import and carry strict compliance obligations. Review the latest GOV.UK guidance because qualifying criteria and application processes change.

Practical Import Checklist for UK E-commerce Founders

Follow these steps each time you plan an import:

Confirm your EORI number is valid and linked to your business.
Obtain the correct commodity code and origin information from your supplier.
Calculate the likely duty and VAT using the current GOV.UK Trade Tariff tool (remember rates change).
Decide whether to use postponed accounting and ensure your VAT registration allows it.
Choose Incoterms that match your preferred tax handling method (for example DDP or DAP).
Provide your courier with accurate commercial invoices showing separate values for goods, shipping and insurance.
Retain all paperwork for at least the current HMRC minimum period in case of inspection.

Start with small shipments to test your process. Many founders initially work with an experienced freight forwarder who handles the customs declarations while they learn the system.

Staying Compliant and When to Seek Help

HMRC expects accurate declarations, correct classification and timely payment or accounting for VAT and duty. Errors can result in penalties, backdated charges or seizure of goods. Keep clear records of every import, including supplier invoices, proof of payment and evidence that any relief was correctly claimed.

As your e-commerce business grows you may need specialist advice on more complex areas such as bonded warehousing, additional tariffs on certain countries of origin, or rules around selling goods that contain batteries or chemicals. Many UK founders discuss these topics with their accountant or a reputable customs broker.

Founders based at Loomworks in Liversedge can access operator mentoring that sometimes includes referrals to local professionals familiar with import compliance.

Frequently asked questions

Do I need an EORI number to import goods to sell online in the UK?

Yes. Most commercial imports require a GB EORI number. Register it free on GOV.UK before placing orders. Use the number on all customs paperwork. Sole traders and limited companies both need one. Check current requirements because the exact format and application process can change.

What is postponed VAT accounting and who can use it?

Postponed VAT Accounting allows VAT-registered UK businesses to defer import VAT to their next VAT return instead of paying it on arrival. This helps cash flow. You must apply via HMRC and meet eligibility rules. Confirm the latest criteria on GOV.UK as they are subject to change.

How does the de minimis rule affect small online imports?

De minimis sets value thresholds below which duty or VAT may not apply. For commercial sales most low-value parcels still attract VAT collected by the courier. Repeated small orders that look like splitting a larger shipment can be treated as one consignment. Always check the current de minimis levels on GOV.UK.

Can I claim duty relief when importing stock for my e-commerce store?

Duty relief is available in specific cases such as inward processing or temporary imports. You usually need prior authorisation from HMRC and must follow strict record-keeping rules. Identify the correct commodity code first, then review current relief options on GOV.UK before importing.

Should I register as a limited company before importing goods?

Many founders start as sole traders and move to a limited company once turnover grows or imports become regular. A limited company can make VAT recovery clearer and may simplify EORI registration. Check Companies House and HMRC guidance for the latest rules on registration and compliance.