As we look forward to January 2021 when the UK will have officially left the EU, the VAT rules for the UK will be changing. Anyone abroad who wishes to sell products in Britain will need to register for VAT from the 1st of January 2021.
Currently, the seller only has to complete a customs declaration form and the purchaser pays the tax on the item. There are a few other changes being made too.
Firstly, the VAT exemption for products worth less than £15 will come to and end. The second is that EU sellers will be liable to pay VAT on their British sales for the first time. And lastly, UK sellers will be liable to European VAT on the products they export to the Continent.
What does this mean for UK businesses?
Most importantly, it means that it will be more expensive for UK businesses to sell goods in Europe and vice versa. Some European businesses may stop selling in the UK which may reduce competition, giving UK businesses a larger opportunity in the UK market.
It’s been reported that a lot of UK businesses are storing large amounts of inventory in EU warehouses to combat the change in VAT rules from the 1st of January 2021.
What does this mean for customers?
If people are choosing to still buy from EU based businesses after the 1st January 2021, they will likely pay a premium on the items.
In order to combat the changes, businesses on both sides will either have to raise their prices for shipping outside of their respective countries or simply stop selling to those customers. This will most likely put people off buying from larger retailers such as Amazon, as most of their products are available from the EU.
However, this means that customers will look to UK alternatives to reduce the costs, leaving a great opportunity for UK based businesses.
If you’d like to learn more about setting up your own online shop, read on for more insights into running your own online business here.