What You Need to Know About the 2021 Key eCommerce Reforms in the UK

The UK tax reform measures, which will take effect on January 1, 2021, aim to maximize the collection of VAT contained in eCommerce sales to ensure the fairness of tax costs between overseas eCommerce and local companies. There are only a few weeks to count down before the measure. The obligation for customs clearance of goods moving between the UK and the EU will start when the transition period is over.

In this case, it is important to know more about the specific calculation method of Duty and Value added tax(VAT) in the EU especially if your target market is in the EU. After The UK left the European Union, the EU is now a club of 27 members (Germany, France, Spain, Italy, Austria, Belgium, Bulgaria, Cyprus, Croatia, the Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden. EU will charge tax if the product value exceeds EUR22).

The three 2021 key eCommerce reforms regarding the UK tax reform measures include:

1. Withdrawal of the £15 VAT exemption on imported goods being sold online to UK consumers. This is known as the Low-Value Consignment Stock relief. From January 2021, all imports are liable to 20% UK VAT
2. Obligation to charge sales (or ‘supply’) VAT at the point-of-sale on imported sales not exceeding £135. This is supported by a simplified customs declaration. This replaces the existing process of paying import VAT when the goods arrive at UK customs
3. OMP’s taking on VAT obligations — calculations and collections — of their third-party sellers on:
   -Any imported sale not exceeding £135; and
   -Sales of any value within the UK by their overseas sellers

The aims of the reforms are to:

• Simplify and improve the process for clearing imported goods being sold to UK consumers;
• Close the import VAT exemption benefit that puts the UK online and high-street retailers at cost disadvantage;
• Reduce the opportunities for online VAT fraud which HMRC estimates costs the UK £1.5billion per annum in lost tax revenues

Whether you are a UK, EU seller, or marketplace, the new rules mean complex changes and complicated duty & tax for your shipments. If not managed, will result in a higher cost in your logistics and fulfillment operation costs.

Shipkoo can help. Our fully automated OMS determination and solutions will take care of all the new calculations and filing obligations for all parties as a result of the UK eCommerce changes and Brexit. Shipkoo is also continuously working on developing new EU shipping routes and providing various shipping options, which is the only way to ensure your products can reach your customers in time at a lower cost. Contact our shipping specialist for more information: https://shipkoo.com/contact/