Set up BREXIT UK Threshold 135 Pound for Products coming from the EU

Accounting & Taxes

Topic summary

EU-based sellers are struggling to implement the UK’s £135 threshold rule for post-Brexit VAT collection. The core issue: Shopify cannot automatically adjust VAT charges based on order value and currency fluctuations.

The £135 Rule:

  • Below £135: Sellers must charge 20% UK VAT at checkout, register for UK VAT, and remit collected taxes to HMRC
  • Above £135: Sellers can make customers pay import VAT and duty upon delivery instead

Technical Challenges:

  • Shopify only allows enabling or excluding UK VAT globally, not conditionally based on order value
  • Currency conversion between EUR/USD and GBP complicates threshold calculations
  • No native reporting exists to separate sales above/below £135 for compliance

Key Clarifications Provided:

  • The threshold applies to B2C only; B2B customers can be importers of record regardless of value
  • For orders above £135, if sellers charge VAT anyway, they must still register and report to HMRC
  • Some sellers find orders above £135 barely profitable due to 12% import costs under DDP shipping

Current Status: The discussion remains unresolved. Multiple users seek workarounds or third-party apps, as Shopify’s “Registration based tax settings” don’t fully address the conditional VAT calculation requirement.

Summarized with AI on November 11. AI used: claude-sonnet-4-5-20250929.
5

Hi Mr Flo,

There are a lot of factors to consider and since I don’t know the details of your business this is not formal advice. But here are my very general comments:

  1. If your product is below 135 GBP let’s say 100 GBP:

You need to charge 20% VAT at checkout so 100 + 20 = 120 GBP that your UK customer pays to you at checkout. You also need to register for a VAT number in the UK and receive a UK VAT number. The item is shipped you are the importer. The package stops in customs. They see here is a product sold for 100 + 20 was already paid in VAT so you do not have to pay any additional import VAT. You clear UK customs: pay duty (cost to you) and show them your UK VAT registration number. You file to the UK tax authorities and pay them the 20 GBP you collected in VAT. Your profit is 100 GBP minus duty. Customer paid 120 total.

  1. If your product is above 135 GBP let’s say 200 GBP:

you can certainly do things the same way as above (40 in VAT clear customs duty UK VAT # file to UK and pay 40 to UK tax authorities).

OR

make your UK customer pay the import fees to the mail office or shipping company. Meaning you charge only 200 and no VAT (0 in VAT). You ship the product clearly marking that your customer is the importer (the shipping doc details important). The package stops in customs and the shipping company/broker clears customs and pays the duty and VAT to customs . The shipping company then hopefully can collect the VAT and duty from the private customer in the UK. If you use the postal mail, they will charge on the import fees to the customer before they release the package, just as they do today.

Does that make more sense hope? As you can see this is very simplified answer and certainly does not apply to every situation. Please let me know if you have any follow up questions.

Thank you

Bianca

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