Does the £135 VAT/Duty Threshold include Shipping/Insurance?

Hi everybody, I would like to know how the £135 threshold for avoiding upfront VAT and Customs Duties on an import from the EU into the UK is calculated. This is for a normal online shopping situation, nothing complicated. I understand that if the “value of the goods” is less than £135, I do not pay Customs Duty, and the VAT is paid by the seller. If the value is above £135, I pay both VAT and the applicable customs duty rate for that item. I understand that there are two different values involved here - the value which is used to calculate if the goods cost more than the £135 threshold (let’s call this the ‘threshold value’), and the value(s) which is multiplied by a percentage to calculate how much VAT or Customs Duty should be paid if the item is determined to be above the threshold (let’s call this the ‘calculation value’). As I understand it, the ‘calculation value’ calculates the Customs Duty payable using a base value which includes shipping and insurance, and then VAT gets calculated on top of that using shipping, insurance and Customs Duty as part of the base value. However, I don’t understand how the threshold value is calculated. My questions are: Does the value used to calculate the £135 threshold for VAT include the cost of shipping and (optionally) insurance? Does the value used to calculate the £135 threshold for Customs Duty include the cost of shipping and (optionally) insurance? Thanks for helping out!

If the goods themselves ( intrinsic value) are £135 or less then the goods are relieved of import duty but the seller should charge the buyer the UK VAT as part of the purchase price. They will charge VAT on the whole value including shipping. They are then obliged to report and pay the VAT charged to their customers to HMRC .The seller should be UK VAT registered. No further charges should be due at the border provided the seller has declared the correct information on the intrinsic value. If a total cost is declared it may be deemed that the goods are over £135. If the goods are above (£135) then the goods will be subject to duty and import VAT at the border. The value on which duty due is based on the cost of the goods plus shipping an insurance. The value on which VAT is due is the value for duty plus the. Duty amount. There is no threshold for payment of VAT . The £135 duty threshold is used to determine whether VAT is charged by the seller or at the border not the amount the VAT is charged on.

Hi ,
 

The starting point for determining whether a sale of goods located outside of the UK, made to a UK consumer, is subject to UK supply VAT under this measure is to consider whether the selling price of the goods exceeds £135, exclusive of VAT. For this purpose, the value should be based on the ‘intrinsic value’ of the goods, which equates to the price at which the goods are sold, excluding: Transport and insurance costs, unless they are included in the price and not separately indicated on the invoice . Any other taxes and charges identifiable by the customs authorities from any relevant documents It is important to bear in mind that the £135 threshold applies to the value of the consignment, not to each individual item within the consignment. To determine the correct VAT treatment you will need to know whether the goods are to be packaged and sent singularly to the customer or as part of a consignment with other goods. If the latter applies then it is the overall value of the consignment that must be considered, and if this is over £135 then normal VAT and customs rules will apply, meaning that import VAT will be chargeable and so supply VAT should not be charged at the point of sale. As regards the costs for Duty purposes I would contact our International Trade Team:  Imports and exports: general enquiries  . Thank you .