Non VAT registered in UK

Julia_Armstrong
New Member
1 0 0

Hello all, Im very new to online selling but have many years in bricks and mortar selling. As a new company we have chosen not to register for VAT - not expecting to reach the VAT threshold for a long time!

How do I set my shopify store to not VAT registered? and therefore no VAT due on sales? 

 I can set my retail prices ok - but the invoice shows VAT charged - which it is not. so I cannot send out invoices that are inaccurate. we would have a legal problem as well as misleading customers. 

there must be other non vat regsitered traders out there - how have you solved this? 

the online chat person suggested i create a seprate collection for EU sales. not the point at all. 

Many thanks

Julia

Replies 21 (21)
Nick
Community Moderator
Community Moderator
4510 433 981

Hi Julia, 

Nick here from Shopify! 

Great question and that completely makes sense regarding the threshold. Shopify has a very helpful guide on non-USA taxes which goes through everything you would need to know about setting up taxes for your store. I also want to share another helpful guide with you for tax overrides and exemptions which goes into detail for VAT exemptions in the UK. You can see the guide by clicking here. There is one other potential workaround on this. It is a little more technical but it is definitely worth a look to see if it is what you are looking for and if it can work for you. It is an advanced tutorial and is not supported by Shopify, but if you think this could be your solution, you could reach out to a Shopify expert directly to help you with it as a small task. 

I hope this helps and does clear this up for you a little with the aid of the guides. Please don't hesitate to ask should you have any other questions about this or anything else. 

All the best, 

Nick

Nick | Community Moderator @ Shopify 
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KTW_Photography
New Member
2 0 5

Not sure if you got this fixed Julia, I realise we're now 2 years on from when you posted, so I hope so! I've just started a shopify store, new to online sales and was having the same issue. I found your post in my research. I've just come off the customer support and it seems to have worked fine. So, for anyone finding Julia's post now ... Try this:  Go to your SETTINGS, found bottom left of your admin dashboard. Then SETTINGS>BILLING>Tax registration>I'm not VAT registered>SAVE. Then, and this is what I missed, you need to edit settings on TAX collected: SETTINGS> TAXES> Tax Regions. Scroll all countries making sure they say NOT COLLECTING. Mine was default set to COLLECTING under United Kingdom. To change this simply hit SET UP. It will show a default of 20% under the title COUNTRY TAX. Enter 0 here and then click SAVE. You should then be back to the same page that has the list of countries. All countries should show NOT COLLECTING. Below the list, there is also the section TAX CALCULATIONS. You need to uncheck the box "Show all prices with tax included". As I said, this appears to have worked for me. Hopefully it may help others. Of course be sure to check whether you should or shouldn't be VAT registered and all that 😉 

 

Good luck! 

Katy 

https://www.ktw.photography/

 

MFE3457
New Member
2 0 5

Thanks Katy, I was having the exact same problem but your post really helped.

Good luck with your new shop!

 

Chloe

KTW_Photography
New Member
2 0 5
That's great Chole 🙂 good luck with your shop too.
markhoskinswork
New Member
2 0 1

Followed your advice.

All-day yesterday I was trying to wrap my head around this.

Cheers and good luck!

TheHuedCrew
New Member
2 0 1

Thank you Katy, your post was very clear and resolved my problem

Ylenia

GavinRufus
New Member
2 0 1
Hey KTWPhotography. Thanks for that useful piece of information. I am still building my website and was wondering if I should pay any tax. I am an International student living in the UK, planning on selling physical goods through shopify. I dont have much idea about any rules here. Could you please message me privately about the steps I should take and things I should do before my website goes online for the customers. Thanks a lot again.
Victor
Shopify Staff
Shopify Staff
1444 139 326

Hi @GavinRufus,

 

I'm not @KTW_Photography, but I wanted to jump in here and offer some assistance. I'd recommend checking out the first post of the dedicated tax thread we offer for UK merchants. This post includes a number of resources that should help you with this.

 

I'd start by reading the links provided there from the UK government website, which outline rules on charging and paying VAT when selling goods in the UK. I would suggest checking out this link in particular, which specifies when you and your business must be registered for VAT to HM Revenue and Customs. They currently state:

 

You must register for VAT if your VAT taxable turnover goes over £85,000 (the ‘threshold’), or you know that it will. Your VAT taxable turnover is the total of everything sold that is not VAT exempt.

This means that if you are just starting out, you will likely not need to register for VAT and charge your customers VAT on their orders at this time. I'd encourage you to read through the different resources I posted in the taxes thread though to gain a more thorough understanding of the tax system in the UK for businesses, and what you obligations are and will be.

 

Kind regards,

 

Victor | Shopify Social Care

 

Victor | Social Care @ Shopify 
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GavinRufus
New Member
2 0 1

Thank you so much, Victor. You made it crisp and clear for me to understand. So, I can start a business with a VAT number which is really a good thing. I was also wondering if I should register my company anywhere like the Govt website before I start? It is my own brand and will be selling custom made goods. 

Victor
Shopify Staff
Shopify Staff
1444 139 326

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

Victor | Social Care @ Shopify 
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Lavaridou
Tourist
4 0 1

 

 

Victor
Shopify Staff
Shopify Staff
1444 139 326

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

Victor | Social Care @ Shopify 
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Cleekers
Tourist
4 0 4

Thanks. Perfect.

Solvution
New Member
1 0 0

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

Add us We also Providing Value.

Astrid1
New Member
1 0 0

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!

Victor
Shopify Staff
Shopify Staff
1444 139 326

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

 

Victor | Social Care @ Shopify 
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JamieBuck
Tourist
11 0 1

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.

 

 

Victor
Shopify Staff
Shopify Staff
1444 139 326

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

Victor | Social Care @ Shopify 
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JamieBuck
Tourist
11 0 1

Great, thanks Victor!