VAT Alert - Low Value Consignment Relief

Rob Geary
Cargo ship

Currently, under the Low Value Consignment Relief (LVCR) a UK business importing goods from outside the European Union of a value below £15 is not required to pay import VAT.

Cargo ship

The UK Government have confirmed this relief will be withdrawn from 1 January 2021 once the Brexit transitional period ends, meaning import VAT will be charged on all imports where there is no relevant separate relief (for example, the existing zero rating for sales of children’s clothes). There will be no changes to the way customs duty is implemented and paid. 

For example, this change would mean the sale of an item valued at £14 would now cost the importer £16.80, with a new VAT charge of £2.80 (at 20% VAT).

The EU itself will also be withdrawing the relief from 1 July 2021. Between January and July 2021, UK suppliers will be able to take advantage of the relief on sales to the EU, as suppliers from a non-EU country. After July 2021, UK suppliers will be required to, for sales valued below €150, register to use the EU’s new VAT declaration the ‘import one-stop shop’ (IOSS). Registration for IOSS can be completed in any EU member state. (may not be needed). 

It is important to recognise what impact these significant changes will have to your supply chain, as well as any impact this may have on your or your customers’ cashflow. 

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