Non VAT registered in UK

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Shopify Staff
Shopify Staff
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Hi @GavinRufus,

 

No problem at all, I'm glad it helped. I don't believe you will need to register your business with the Government when starting out, no, and there are various considerations to make when doing so. I'd recommend checking out the website smallbusiness.co.uk, along with the Government's documentation, as it provides plenty of guidance on this topic. Some articles I'd recommend are:

 

I hope these are of some use to you as well.

 

Kind regards,

 

Victor | Shopify Social Care

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Shopify Staff
Shopify Staff
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Hi @Lavaridou,

Thank you for reaching out, and I'm glad to hear that you found the post helpful. Learning and understanding your tax obligations can be a bit of a headache, and ultimately nobody at Shopify can tell you exactly what these obligations are—we are not tax advisors and different merchants will have different obligations. All we can really do is point you in the right direction of where to find this information and tell you how to set things up within the Shopify admin.

As mentioned earlier in this thread, HMRC state that VAT registration is mandatory only if you meet either of the following conditions:

* You expect your VAT taxable turnover to be more than £85,000 in the next 30-day period.
* Your business had a VAT taxable turnover of more than £85,000 over the last 12 months.

This is all per the government's website, found here. Customers in the UK or the EU will only be charged VAT if you enable taxes for either of these regions, which you should not need to do if you're not VAT registered. This is something you'll want to check in on if you are unsure, or consult with a tax professional. The government also have some information about selling abroad:

I hope this helps but let me know if you've any further queries.

Kind regards,

Victor | Shopify Social Care

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Thanks. Perfect.

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Good.Stuuf.Clear.Short.And.Efficient.

Add us We also Providing Value.

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Hey, just reading up about taxes and like to check something. I'm based in the UK. Just starting out and won't be registering for VAT yet. I'm looking into dropshipping items produced in China that I intend on selling  in Canada, US and Australia. Wondering if I need to check the box "charge tax on shipping rates"?  Thanks!

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Shopify Staff
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Hi @Astrid1,

Thanks for reaching out. The "charge tax on shipping rates" option is only needed if you are required to charge taxes on shipping in any location you sell to. If you are just starting out you likely will not need to do this, but I'd encourage you to do your own research into the tax laws of the countries you are selling into and to consult a tax professional if you are unsure of your own obligations. 

Kind regards,

Victor | Shopify Social Care

 

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Thanks for all the advice, I'm too in the UK and nowhere near the VAT threshold. I've set up my tax settings as above but what should I do with the 'Charge tax on this product' option on my products?

Actually, I've read Victor's link and now I'm confused again. I'm not sure what to do with the 'Show all prices with tax included' box either..? All countries are listed as 'not collecting' in my settings.

Sorry, not good at this stuff.

 

 

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Shopify Staff
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Hi @JamieBuck,

No need to apologize! Getting your head around taxes can always be tricky, so there's no shame in reaching out for help. I'm happy to offer my advice.

If you're not required to charge taxes for your products yet, either in the UK or in other regions where to may sell to, you can leave the "charge tax on this product" option disabled. You would only need to enable this option if and when you are required to charge any of your customers sales taxes when they place their orders. This option can also be used to determine which products require taxes to be charged when bought for when you are collecting and paying sales taxes, as some products may be tax-exempt. You can leave this option disabled for now, if indeed you are not charging sales tax at this time.

In terms of the "Show all prices with tax included" option, it again doesn't matter too much if you are not collecting sales taxes at this time, but if your primary market is the UK/ EU then you can go ahead and enable it. This option determines whether the listed prices of your products includes the taxable amount, and if it's disabled then any eligible taxes will be added as an additional cost to the listed price of the product (which is generally how taxes are shown in the USA and Canada). If you enable this option and a customer places an order, they will see that a tax rate of 0% has been applied to the order if you've not required them to pay any tax.

You can read more about setting up taxes here, but please let me know if you've any further questions.

Kind regards,

Victor | Shopify Social Care

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Great, thanks Victor!