Regional Support: Taxes (UK)

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My store is based in the UK. I just started a trial account using shopify.com rather than shopify.co.uk.

Should I switch to a shopify.co.uk site?
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Shopify Staff
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Hey @richardg64,

 

Thank you for reaching out, and welcome to Shopify! There's no difference between stores or accounts when signing up through shopify.com or shopify.co.uk, so there's no need to close your store and restart one via the .co.uk site.

 

Kind regards,

 

Victor | Shopify Social Care

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Hello! I am just started my shopify store in the UK and I plan on selling a few things but before I get started I was wondering if you could help me with some queries.

 

1) I am a student with no knowledge on taxes etc. When do I charge VAT? And if I am selling to people in the UK as well as the US should I change any tax settings etc? 

2) When am I supposed to pay taxes and how should I pay them?

 

Thank you!

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Hi Victor,

 

In your second screen shot you show what the inclusive tax amount is - I only see what shows in my store as the third screen (amount, sub total, and total are al the same). What should I be looking at to get the tax amount showing. Is this driven by the theme?

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Shopify Staff
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Hi @ColinR,

 

Thank you for reaching out. It's possible that this could be due to the theme you're using, as the theme ultimately determines how data from the backend of Shopify is presented on your storefront. Do you definitely have prices set to be tax-inclusive? And when you test this, are you entering in an address from a region where taxes are due to be charged?

 

If you'd also be happy to share you store's URL here, I can take a closer look for you.

 

Kind regards,

 

Victor | Shopify Social Care

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Hi @FazalKhan98,

 

Thank you for reaching out with your questions, and I'm glad to hear that you're considering these questions when getting started. Taxes can be confusing, and the information I can provide is limited, but I'll offer the advice I can below.

 

Your primary source of information should come from the UK government's website, and I have included a number of links from them in the first post in this thread. This page specifically explains some of the key details when it comes to charging VAT, and what your responsibilities as a business owner are when it comes to collecting and paying VAT when selling in the UK. There are certain thresholds that, once met, your business must be registered with HM Revenue & Customs in order to pay VAT—at the time of writing, this is when your business' VAT taxable turnover is more than £85,000.

 

You will also want to consider how you want to set up your business, such as as a sole trader or a private limited company, which will also impact what your tax obligations are. Generally, most merchants who are starting a business in the UK will do so as a sole trader, as this is usually an easier process and comes with less associated costs and regulations. More can be read on this here.

 

I would recommend when starting out it is best to focus on one market to begin with, and make sure you have everything set up correctly there first, but if you do wish to expand and sell into the USA and other countries, that can be done too. It is unlikely that if you are based in the UK and have no physical presence in the USA (e.g. a warehouse, office etc), you would be required to charge your customers sales tax on orders, although your customers would be subject to import duties. I would suggest taking a read through this blog I came across which offers advice on this topic.

 

Please bear in mind that Shopify cannot offer direct tax advice to merchants, and can only really help with helping you configure your tax settings in the backend of the store. If you are just starting out, however, and therefore likely do not need to register for VAT at this point, then you likely will not need to charge your customers VAT for orders on your Shopify store. Here is another blog that covers this topic.

 

Ultimately, it is your responsibility to determine what your tax responsibilities are and what that means for your business and customers, so I'd highly recommend doing your own research on this topic prior to launching the store. There are a host of online resources on this topic, both from the UK government and third-party websites and blogs, so you should find the information you need. The links I've provided here and in my initial post should give you a good start. If you are still unsure, you could also consider hiring a tax professional to ensure you are doing everything correctly.

 

Kind regards,

 

Victor | Shopify Social Care

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Thanks @Victor 

 

Theme is Brooklyn and URL is masatojones.myshopify.com

 

We're on the cusp of having to charge VAT so I'm not sure at what point we should be seeing this. At the moment we're not showing a tax inclusive message but before we turned it off it wasn't showing as per your example hence my question.

 

Best Wishes,

Colin R.

 

 

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Shopify Staff
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Hi @ColinR,

 

Thank you for sharing your store here. I did add a product to the cart on your store and proceeded to checkout, and indeed there was no mention of taxes as part of the order here. This is likely because you do not have some settings enabled which allow for taxes to be charged, and/ or displayed at checkout.

 

As your store is a UK-based business, you'll presumably want to have taxes included within the price of the product—if so, you'll want to have this option enabled in Settings > Taxes:

 

19-10-tqk1j-yugcd.png

 

This means when taxes are due to be charged to the customer, the price you've listed for the product(s) in the admin will be deemed tax-inclusive and the customer will be shown how much of their order is VAT.

 

You'll also want to ensure that your products are taxable, otherwise the customers will not be shown any tax information at checkout. You can check whether taxes are due to be charged for a product by heading to the Products section of the admin and clicking on the product in question. If you have numerous variants for a product, the "charge taxes" option will be viewable within the variant editor:

 

20-06-jf40z-tjt54

 

You can also enable taxes to be charged for numerous products and variants at once via the bulk editor.

 

To clarify, if you enable this option on products and variants, this does not mean taxes will always be charged at checkout—it just means the system will include the tax amount if the customer is eligible to pay VAT. As an example, if you have a £5 product and you are required to collect VAT from UK customers but not those from the USA, whilst customers from both countries would pay £5, only the customer from the UK would see that VAT is being charged as part of their order.

 

I hope this clarifies things but please let me know if you've further questions on this.

 

Kind regards,

 

Victor | Shopify Social Care

 

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Hi. Our store is facing VAT fees when delivered to our international and UK customers and we have discovered that this is happening to our products and not happening from products bought and delivered from other similar stores. Our store is based in the US and so are other similar stores. The example I will give is clearer if I tell you from my personal experience as a customer.

 

I live in Ireland and work for a US clothing merchandise store. I had the store send me a t-shirt (from US to Ireland) to the value of $35 and I had to pay a VAT fee @23% on arrival to collect the hoodie.

 
Around the same time I ordered a t-shirt, vinyl & CD from a different merchandise store where it was almost double the cost $68 but I did not have to pay any VAT on arrival, despite it costing more. I order from them frequently and never paid VAT fees.
 
So as you can see VAT charges occur from our merchandise but not from the other merchandise store even though we are in the exact same business and both ship using USPS. I cannot find out why this is happening, only that maybe VAT fees are calculated and included in shipping costs of other stores and we have not set that up.
 
Our customers from various countries have told us that they also had to pay fees on our products so it's not an exclusive problem to me in Ireland.
 
Do you have any idea what's going on? Any insight would be greatly appreciated.
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@Dunne-08 

 

If your online purchase costs more than €22 you will have to pay VAT. If your online purchase costs more than €150 you will have to pay VAT and customs duty. This will be collected by the company that delivers your parcel. The company usually have an administration charge. Methods of delivery and collection differ from company to company, so you should contact them directly for more information.

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